Uses the net present value method and has a discount rate

Assignment Help Financial Management
Reference no: EM13870736

Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $110,000. The future cash inflows from its project are $30,000, $25,000, $50,000 and $40,000 for years 1, 2, 3 and 4, respectively. Dweller uses the net present value method and has a discount rate of 10%. Will Dweller accept the project?

Reference no: EM13870736

Questions Cloud

What is the cost of equity : Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,700. The company has $3,200 in bonds outstanding that have a 6 percent coupon and pay interest a..
Change in shareholders equity during year : It is true that the change in shareholders’ equity during a year is equal to the change in net assets in that year. This equation is important because:
What is the firms weighted average cost of capital : A firm has debt of $90,000, equity of $140,000, a leveraged value of $100,000, a cost of debt of 6%, a cost of equity of 12%, and a tax rate of 40%. What is the firm's weighted average cost of capital?
Project that has initial after-tax outlay or after-tax cost : Geronimo, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $190,000. The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000, $40,000, $70,000 and $45,000. Geronimo uses ..
Uses the net present value method and has a discount rate : Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $110,000. The future cash inflows from its project are $30,000, $25,000, $50,000 and $40,000 for years 1, 2, 3 and 4, respectively. Dweller use..
What is the payback period without discounting cash flows : Consider the following four-year project. The initial after-tax outlay or after-tax cost is $1,000,000. The future after-tax cash inflows for years 1, 2, 3 and 4 are: $400,000, $300,000, $200,000 and $200,000, respectively. What is the payback period..
What was cys dollar profit or loss and holding period return : Cy bought a share of stock for $47.50 that paid a dividend of $.72 and sold one year later for $51.38. What was Cy's dollar profit or loss and holding period return?
Holding period return and annual percentage rate : Chad purchased Hampton Industries Inc. stock for $14.65 and sold it 6 months later for $17.38 after receiving a $0.25 dividend. What is Chad's holding period return (HPR), Annual Percentage Rate (APR), and Effective Annual Rate (EAR)?
Calculator for appropriate number of payments per year : You have agreed to a $140,000 fixed-rate loan from First National Bank today and promise to repay the loan with 36 equal monthly payments at an APR of 7%. How large are your monthly payments? Use a financial calculator to determine your answer. Make ..

Reviews

Write a Review

Financial Management Questions & Answers

  How much must ron deposit in sinking fund each six months

Ron borrows $20,000 for 20 years at an annual rate of interest of 10% convertible semi-annually. He repays $500 in interest at the end of each six months. The principal and the remaining accrued interest are to be paid at the end of 20 years by equal..

  Very flexible in your repayment plan

You borrowed $20,000 today from your uncle to finance your college education. Your uncle is very flexible in your repayment plan, but he will charge an 8% interest compounded annually for any unpaid balance. Suppose your payment plan is as follows

  Input the amount as positive value

On January 1, you sold one March maturity S&P 500 Index futures contract at a futures price of 1,750. If the futures price is 1,850 on February 1, what is your profit or loss? The contract multiplier is $250. (Input the amount as positive value.)

  Equivalent annual annuity

Corcoran Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for $23,000, which will generate cash flows of $8,000 at the end of each of the next 6 years.

  Purchase asset portfolio that exactly matches liabilities

A company must pay liabilities of $19000 and $11000 at the end of years 1 and 2, respectively. The only investments available to the company are 1 and 2 year zero coupon bonds with yields 6% and 7%, respectively. Calculate the cost to the company tod..

  State lottery-strict economic point of view

Gabrielle just won $2.5 million in the state lottery. She is given the option of receiving a total of $1.3 million now, or she can elect to be paid $100,000 at the end of each of the next 25 years. If Gabrielle can earn 5% annually on her investments..

  Market value added

Hayes Corporation has $300 million worth of common equity on its balance sheet, and 6 million shares of stock outstanding. The company's Market Value Added (MVA) is $162 million. What is the company's stock price?

  Aims1 to allow students to explore in greater detail the

aims1. to allow students to explore in greater detail the major learning outcomes of the module and to demonstrate a

  Deposit a regular amount every three months until he retires

A man is planning to retire in 25 years. He wishes to deposit a regular amount every three months until he retires, so that, beginning one year following his retirement, he will receive annual payments of $60,000 for the next 10 years. How much must ..

  Wal-mart cost of capital

Estimate the market value and weight of each component of the capital structure and estimate the book value and weight of each component in the capital structure.

  Discuss the following topicdoes purchasing power parity ppp

discuss the following topicdoes purchasing power parity ppp eliminate concerns about long-term exchange rate risk? one

  What is the unlevered return on equity of the new project

Company A has a debt of $25,000,000 while its equity is $115,000,000. The beta of A's levered equity is 0.95 and the company keeps a constant debt-to- equity ratio. Company A's cost of debt is 4.35% and it bears no systematic risk. The expected retur..

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