The irr is greater than the cost of capital

Assignment Help Financial Management
Reference no: EM131556887

Delta Co. is considering project D. . D: -$2,000, $4,000, $6,000, -$10,000 D’s cost of capital is 8%, and the spread sheet says that its IRR is 15% but its NPV at 8% is -$306. Should Gamma take the project, because the IRR is greater than the cost of capital? Explain

Reference no: EM131556887

Questions Cloud

What monthly payment will the turners be required to make : HOME FINANCING The Turners have purchased a house for $150,000. They made an initial down payment of $30,000 and secured a mortgage with interest charged.
Calculate the npv and irr of each : Calculate the NPV and IRR of each. Are they acceptable?
Which currency is expected to appreciate in value : Which currency is expected to appreciate in value? Which country do you think has higher interest rates-the United States or Canada? Explain.
What will be their total interest payment : HOME FINANCING If the loan is amortized over 15 yr: What monthly payment will the Turners be required to make?
The irr is greater than the cost of capital : Should Gamma take the project, because the IRR is greater than the cost of capital? Explain
What are some techniques you plan to utilize : What are some techniques you plan to utilize to help you stay focused on your studies during the summer
Determine the amount of each monthly installment : SINKING FUNDS The management of a condominium association anticipates a capital expenditure of $120,000 in 2 yr for the purpose of painting the exterior.
What is the no-arbitrage prices of b today : One year from today for an hour a conversion window will open and A and B may be exchange one for one without cost. What is the no-arbitrage prices of B today?
What is effective rate of interest the bank is charging bill : CREDIT CARD PAYMENTS The outstanding balance on Bill's credit-card account is $3200. The bank issuing the credit card is charging 18.6%/year compounded monthly.

Reviews

Write a Review

Financial Management Questions & Answers

  Mutual funds are an appropriate investment vehicle

The Reverend Mark Thomas is the minister of a church in the San Diego area. He is married, has one young child, and earns a “modest income.” Because religious organizations are not notorious for their generous retirement programs, the reverend has de..

  Currently has an operating cycle

Center Enterprises currently has an operating cycle of 58 days. You are analyzing some operational changes which are expected to increase the accounts receivable period by 4 days and decrease the inventory period by 3 days. The accounts payable turno..

  What has happened to the exchange rate value

What has happened to the exchange-rate value of the dollar in each case? - The spot rate goes from $1.25/SFr to $1.30/SFr.

  Find the proceeds on the third-party discount note

A man holds a note of $5,000 that has an interest rate of 12% annually. The note was made on March 19 and is due November 11. He sells the note to a bank on June 11 at a discount rate of 11% annually. Find the proceeds on the third-party discount not..

  Who intended to strengthen the national government

Who intended to strengthen the national government by having the national government assume the state debts owed to bondholders and foreign investors? Who believed that the national government could do anything the constitution did not forbid it to d..

  Preferred stock-debt and market

You are given the following information concerning Parrothead Enterprises: Debt: 10,800 7.3 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 108.5. Market: An expected return of 10.2 percent, a risk-free rate of 5.15 ..

  What happens to the wacc for firm

What happens to the wacc for a firm with 50% debt and 50% equity, when tax rate changes from 40% to 50%. the firm pays 12% on its debt 20% on its equity and has current 40% tax rate

  Prepare contribution format income statement for the year

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $200. What is the company’s break-even point in terms of the number of barbecue grills sold? Assume that the company uses variable costing. Compute..

  Before the buy-back the number of outstanding shares

Jam llc unexpectedly executed a share buy-back. Before the buy-back the number of outstanding shares was 11,123,000, the market price of one share was $2.04 and the return on levered equity was 12.00%. The return on levered equity after the buy-back ..

  Nuclear research laboratory

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $5,700,000 and it would be depreciated straight-line to zero over..

  Employers offer group healthcare insurance plans

Employers offer group healthcare insurance plans because

  Expected earnings stream for sprint

The expected earnings stream for Sprint for the next three years is expected to be $40,000, $50,000, and $50,000 respectively (assume the firm falls off the face of the earth in three years as we did in class). Meanwhile, interest rates are expected ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd