Using npv method and a constant discount rate

Assignment Help Corporate Finance
Reference no: EM13302395

1. The initial investment of a project is $110,000. The following are the estimated cash flows:
Year Cash Flow
1 $30,000
2 40,000
3 20,000
4 40,000
5 50,000
Using NPV method and a constant discount rate of 12%, determine if the project is acceptable.

2. If a company issues a $1000 par value bond with a $90 coupon and a maturity date of 10 years and floatation cost are 2% of the par value of the bond, calculate the cost of this debt issue, assuming that the firm is subject to a 40% tax rate.

3. Using the Black-Scholes model, calculate the fair value of a call option having the following features:
Price of stock $75
Exercise Price $70
N(d1) 0.68
N(d2) 0.75
Risk-free rate 5%
Time to expiration 12 months

4. What do financial managers try to maximize, and what is their second objective? Be very specific and elaborate in your answer.

Reference no: EM13302395

Questions Cloud

What is the yield to call : Interest rates have declined since it was issued, and it is now selling at 114.12% of par, or $1,141.2
What is the minimum coefficient of road adhesion needed : The owners wish to achieve an initial acceleration from rest of 22 ft/(sec^2) on a level paved surface. What is the minimum coefficient of road adhesion needed to achieve this acceleration
What is the centripedal acceleration of the child : A 40.0 kg child takes a ride on a Ferris wheel that rotates four times each minute and has a diameter of 18.0 m, What is the centripedal acceleration of the child
Then how much should you be willing to pay for the bond : Then how much should you be willing to pay for the bond? Round your answer to two decimal places.
Using npv method and a constant discount rate : Using NPV method and a constant discount rate of 12%, determine if the project is acceptable.
Calculate the present value and future valvue of this fund : To save for college, the Smiths open a fund in which they will deposit $2,000 per year for 18 years. Viewed as a continuous income stream and assuming an APR of 6 percent compounded continuously, calculate the present value and future valvue of th..
Determine what is the drag coefficient at the cars top speed : A 3000-lb car has a maximum speed (at sea level and on a level, paved surface) of 140 mi/h with 16" radius wheels, a gear reduction of 3.5 to 1, and a drivetrain efficiency of 92%. It is know that at the car's top speed the engine is producing 220..
What is the companys total tax liability : 1. Clinton Industries had $120,000 in taxable income in 2007. What is the company's total tax liability for the year?
Evaluate the molarity of of the solutions of methanol : calculate the molarity of of the following solutions 6.57g of methanol ( CH3 OH) in 1.50 x 10^2 mL solution

Reviews

Write a Review

Corporate Finance Questions & Answers

  What is the profitability index of the project

What is the profitability index of the project and the constant-growth rate for dividends must be equal to the required rate of return.

  Valuation of stock through growth model

Valuation of stock through growth model - Are the PVGO figures correlated with the analyst estimated EPS growth rates? Would you think these two "growth" metrics should be correlated? Why or why not?

  Prepare a pro forma income statement for the ebit

Prepare a pro forma income statement for the EBIT level solve for in Part A. that shows EPS will be the same regardless whether Plan A or B is chosen.

  Compare and contrast mature profitable companies

Compare and contrast mature profitable companies with stable cash flows with firms with higher risk with unstable cash flows.

  Implications of major trends of r&d expenditures

What financial theory do you think affects the global capital market the most and why and What are the implications of major trends of R&D expenditures in the United State.

  Discuss business and riskiness of the company

Consider three companies: Mattel, Clorox, and MGM Resorts International. Reflect on nature of the business of these three corporations.

  Accrual accounting role in statements

Discuss and explain some of the characteristics of income statement, balance sheet & cash flow statement. From perspective of story told by every statement?

  Calculate the dfl under both structures

Calculate EPS under the current and proposed capital structures and calculate the DFL under both structures

  Using the annual statistics create an excel plot

Using the annual statistics create an Excel plot with standard deviation (volatility) on the x-axis and average return on the y-axis

  Compute the value of investment

Compute the value of investment - Date of purchase of the capital and Date that the capital starts to accumulate interest

  Find the projects standard deviation of npv

Assume that this project has average risk. Construct a decision tree and determine the projects expected NPV and Find the project's standard deviation of NPV and coefficient of variation

  Find what is the stock price

What is the market value of the debt and what is the market value of the firm also find what is the stock price?

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