What is the irr of this investment? opportunity

Assignment Help Financial Management
Reference no: EM131526797

You are considering an investment in a clothes distributer. The company needs $107,000 today and expects to repay you $123,000 in a year from now.

A) What is the IRR of this investment? opportunity? Given the riskiness of the investment? opportunity, your cost of capital is 19%.

B) What does the IRR rule say about whether you should? invest?

Reference no: EM131526797

Questions Cloud

Describe the arbitrage strategy : If the option price is below the lower bound, describe the arbitrage strategy.
Decide between two different conveyor belt systems : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems.
What is the aftertax cash flow from the sale of asset : If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset?
Essential problem of banking : Uncertainty over deposit levels has been called the "essential problem of banking".
What is the irr of this investment? opportunity : What is the IRR of this investment? opportunity? Given the riskiness of the investment? opportunity, your cost of capital is 19%.
Cost to prepare the equipment for producing hot dogs : The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. The cost to prepare the equipment for producing hot dogs is $66.
Storage and insurance costs are zero : If the spot price of gold is $983 per troy ounce, the risk-free interest rate is 7%, and storage and insurance costs are zero. what should be the forward price
Cost of capital estimate to leave decision unchanged : You are considering opening a new plant. Use the IRR to determine the maximum deviation allowable in the cost of capital estimate to leave decision unchanged.
Calculate the NPV of this investment opportunity : Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year.

Reviews

Write a Review

Financial Management Questions & Answers

  Using net present value when evaluating projects

Green Landscaping Inc is using net present value (NPV)when evaluating projects Green Landscaping cost of capital is 13.17 percent.

  What would his monthly payments be at this rate

David would like to buy a new boat. The boat costs $75,000. David can put 20% down and would like to finance the rest with a 10 year loan. The bank is offering a rate of 3.99% APR on that term. What would his monthly payments be at this rate?

  About simple interest present value

Ramon needs $25,000 at the end of 6 months for a down payment on a new house. What amount should he deposit today in an account paying 3.6% simple interest in order to reach his goal? Find the amount Jose should deposit today in order to have $5,000 ..

  What was variance of the returns over this period

What was the arithmetic average return on the stock over this five-year period? What was the variance of the returns over this period?

  Personal property coverage

Keith and Dena Diem have personal property coverage with a $250 limit on rency, a $1,000 limit on jewelry, and a $2,500 limit on gold, silver, and pewter The do not have a personal property floater. If $500 in cash, $2,400 of jewelry, and $1,5 of pew..

  What is the cost of the preferred stock

LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 12%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 30%, what is LL's after-tax cost of debt?..

  Describe one method that could be used to estimate prices

For stocks that don’t pay dividends, describe one method that could be used to estimate their prices?

  Determine the total amount of his contributions

Determine the single deposit now that will provide the same retirement benefit. Determine the total amount of his contributions.

  Determine the average rate of return on the equipment

Pocket Pilot Inc. is considering investment in new equipment that will be used to manufacture mobile communications device. Determine average rate of equipment

  Standard deviation of return-risk-free rate of interest

The returns on stocks A and B are perfectly negatively correlated (). Stock A has an expected return of 21 % and a standard deviation of return of 40%. Stock B has a standard deviation of return of 20%. The risk-free rate of interest is 11 %. What mu..

  Optimistic about the prospects of the lease

Valuing an American Option J&B Drilling Company has recently acquired a lease to drill for natural gas in a remote region of southwest Louisiana and southeast Texas. The area has long been known for oil and gas production, and the company is optimist..

  What is the optimal capital structure for this firm

The cost of both depth equity and capital rise as a firm increases its reliance on one or the other. Suppose that a for-profit company has identified the following costs for debt and equity: What is the optimal capital structure for this firm?

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