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What is fama''s of debt-equity ratio

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Your friend asks you to invest $10,000 in a business venture. Based on your estimates, you would receive nothing for four years, at the end of year 5 you would receive interest on the investment compounded annually at 8%, and at the end of year 6 you would receive $14,500. If your estimates are correct, what would be the IRR on this investment?

Davis industries has to decide between a gas vs. electric powered forklift truck. The electric powered truck will cost $22,000 where as gas powered truck costs $17,500. The cost of capital is 12%. The life of both the trucks is 6 years. The net cash-flows from electric powered tuck will be $6,290 per year and $5,000 for the gas powered truck. The firm will choose only one of these trucks. Calculate NPV and IRR for each truck and make your recommendation.

Fama's has a WACC of 9.8%. The company's cost of equity is 13%, and its cost of debt is 6.5%. The tax-rate is 35%. What is Fama's of debt-equityratio?

Reference no: EM131019665

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