The appropriate discount rate-assuming average risk

Assignment Help Financial Management

Reference no: EM132014478

The NuPress Valet Co. has an improved version of its hotel stand. The investment cost is expected to be $69 million and will return $12.9 million for 5 years in net cash flows. The firm's target debt-to-equity ratio is 1.04. The cost of equity is 11%, the cost of debt is 5%, and the tax rate is 34%.

The appropriate discount rate, assuming average risk, is: (Round answer to 4 decimal places, round intermediate calculations to 5 decimal places)

Reference no: EM132014478

Questions Cloud

What is the post-merger value per share : What is the post-merger value per share?

What will the total variable cost estimate be : If the company conducts a sensitivity analysis using a variable cost of $12, what will the total variable cost estimate be?

Proposed project using standard sensitivity analysis : Southern Goods is analyzing a proposed project using standard sensitivity analysis.

The initial cash flow for this building project : What amount should be used as the initial cash flow for this building project?

The appropriate discount rate-assuming average risk : The appropriate discount rate, assuming average risk, is:

What is the npv of the project at stage one : What is the NPV of the project at stage 1 (year 0)?

What is phil weighted average cost of capital : What is Phil's weighted average cost of capital?

What is the erosion cost : Jamie's Motor Home Sales currently sells 1,000 Class A motor homes, 2,500 Class C motor homes, What is the erosion cost?

What will be the new portfolio beta : You have a portfolio with a beta of 1.21. What will be the new portfolio beta if you keep 90 percent of your money in the old portfolio.

User Account

All Pages