Weighted average cost of capital

Assignment Help Financial Management

Reference no: EM132067133

1. A project requires an initial investment of $20 millions. The project is expected to generate $2.25 millions in after-tax cash flows each year forever. If the weighted average cost of capital (WACC) is 10% calculate the NPV of the project.

4.11 million

5.15 million

3.67 million

2.50 million

2. FCF1 = $10 million; FCF2 = $15 million; free cash flow grows at a rate of 4% for year 3 and beyond. If the weighted average cost of capital is 14%, calculate the value of the firm.

a. $170.72 million

b. $153.33 million

c. $140.35 million

d. $166.73 million

3. A firm has a market equity value of $20 million and debt has a market value of $10 million. What is the after tax weighted average cost of capital (WACC) if the before tax cost of debt is 6%, the cost of equity is 21% and the tax rate is 20%?

a. 18.70%

b. 16.14%

c. 17.66%

d. 15.60%

Reference no: EM132067133

Questions Cloud

How much money did the organization receive : An organization is owed £50,000 by its trade debtors (receivables), How much money did the organization receive from its trade debtors and in the year

Discuss the type of actuator in case : Discuss the type of actuator in this case. Can you suggest any improvements in the actuator that would have prevented this unfortunate breakdown?

Calculate the break-even in monthly dollar sales : Wyly Inc. produces and sells a single product. The fixed expense is $356,643 per month. The break-even in monthly dollar sales is closest to

Determining the doping concentration : Doping concentration is 10^15cm-3 . How many kT is the difference between the Fermi energy and Ei in the bulk region? What is the Fermi potential?

Weighted average cost of capital : If the weighted average cost of capital (WACC) is 10% calculate the NPV of the project. If weighted average cost of capital is 14%, calculate the value of firm

Prepare journal entries to reflect the dividend declaration : Prepare journal entries to reflect the (1) dividend declaration, (2) date of record, and (3) date of payment

Validate an idea with your own experience : Offer and support an alternative perspective using readings from the classroom or from your own research in the Campbellsville University Library.

What is the significance of nevis island : Alexis changes banks following her troubles with SBT. At her new bank, Acme Security Trust (AST), RSA is used as the cryptographic system.

Determine the basic earnings per share for crystal arts : Crystal Arts, Inc., had earnings of $408,700 for 2016. Determine the basic earnings per share for Crystal Arts

User Account

All Pages