The present value of the free cash flows

Assignment Help Financial Management
Reference no: EM131529769

A retail coffee company is planning to open 95 new coffee outlets that are expected to generate $16.3 million in free cash flows per year, with a growth rate of 2.6% in perpetuity. If the coffee company's WACC is 10.3%, what is the NPV of this expansion?

The present value of the free cash flows is $ million. (Round to two decimal places.)

Reference no: EM131529769

Questions Cloud

What are the total fixed costs for new battery : What is the total per-unit variable cost associated with the new battery? What are the total fixed costs for the new battery?
Calculate the effective rate of interest : Assume the $27,872 Treasury bill, 5% for 15 weeks. Calculate the effective rate of interest.
Market portfolio and standard deviation : What expected rate of return would a security earn if it had a .54 correlation with the market portfolio and a standard deviation of 55.9 percent?
What price should they sell the bicycles : If they would like to earn 23% per unit, at what price should they sell the bicycles?
The present value of the free cash flows : A retail coffee company is planning to open 95 new coffee outlets that are expected to generate $16.3 million in free cash flows per year,
Soft drink manufacturer opened a new manufacturing plant : A soft drink manufacturer opened a new manufacturing plant in the Midwest. Its variable costs for the ingredients are $3.00 per package.
Local newspaper to publicize your photography business : Assume you have decided to buy an advertisement in the local newspaper to publicize your new photography business.
What is horizontal channel conflict : What is vertical channel conflict? What is horizontal channel conflict?
Firms must think about when selecting a channel structure : What are some considerations that firms must think about when selecting a channel structure?

Reviews

Write a Review

Financial Management Questions & Answers

  Over-own-bond-yield-plus-judgemental-risk-premium approach

The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 8% per year in the future. Shelby's common stock sells for $20.25 per share, its last dividend was $2.00, and the company will pay a dividend of $2.16 at the end o..

  Bond valuation-outstanding bonds

Nungesser Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 8 years to maturity, and an 8.5% YTM. What is the bond's price?

  How sensitive is OCF to changes in quantity sold

Consider a three-year project with the following information: initial fixed asset investment = $674,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $32.95; variable costs = $22.00; fixed costs = $204,500; ..

  Find the financial break-even quantity

Consider a project with the following data: accounting break-even quantity = 14, 200 units; cash break-even quantity = 10, 300 units; life = five years; fixed costs = $170,000; variable costs = $27 per unit; required return =12 percent. Ignoring the ..

  What was your total return for last year

You bought a share of 4 percent preferred stock for $95.90 last year. The market price for your stock is now $97.38. What was your total return for last year?

  What is the appropriate long-run market risk premium

You have just computed the Beta of a stock to be 2.5 and the estimate of the relevant risk-free rate is 5%. The expected market return next period is 12% and your estimate of Ke is 23%. What is the appropriate long-run market risk premium? a. 7.0% b...

  The dividend if it follows a residual dividend policy

Marcus, Inc. has a capil budget of $1,500,000 and it wants to pay a dividend of $600,000. Its target capital structure is 45% debt and 55% equity. How much net income must it earn to meet its captial budgeting requirements and pay the dividend if it ..

  After-tax cash flows-including depreciation

Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $17,100 and that for the pulley system is $22,4..

  Calculate the standard deviation of the portfolio

Calculate the standard deviation of the portfolio described in the table below. Assume that the correlation between the two assets is 25%

  Comparing two different capital structures

Haskell Corp. is comparing two different capital structures. Plan I would result in 14,000 shares of stock and $95,000 in debt. Plan II would result in 8,000 shares of stock and $190,000 in debt. The interest rate on the debt is 9 percent. a. Ignorin..

  Current yield-yield to maturity and capital gains yield

Current yield, capital gains yield, and yield to maturity Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to chang..

  Stated rate number of times compounded effective rate

Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)

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