User Account

All Pages

What is the net present value of project

Assignment Help Business Economics
Reference no: EM132286050

You are the CEO of Value-Added Industries, Inc. (VAI). Your firm has 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. The firm does not have any debt. You discover an opportunity in a new project that produces positive net cash flows with a present value of $210,000. Your total initial costs for investing and developing this project are only $110,000. You will raise the necessary capital for this investment by issuing new equity. All potential buyers of your common stock will be fully aware of the project's value and cost, and are willing to pay "fair value" for the new share of VAI common stock.

a) What is the net present value of this project?

b) How many shares of common stock must be issued, and at what price to raise the required capital?. Hint: the stock price should reflect the value created by the investment opportunity.

c) What is the effect, if any, of this new project on the value of the stock of existing shareholders?

Reference no: EM132286050

Questions Cloud

How to prepare to deal with a significant incident : In your first post, imagine you are a senior command staff member of a medium sized police department in Los Angeles County.
What is the ytc : There is a call premium of 5%. If they are currently priced at $1200 per bond. What is the YTC? If they are not called, what is YTM
Lifetime of the bond : Consider a discount bond and assuming that the YTM is expected to remain constant over the lifetime of the bond, does one expect the current yield
Explain the hacker ethic and hacker manifesto : CRJ 310 : Explain the hacker ethic and hacker manifesto. Give your opinion as to why hackers do not consider themselves to be criminals.
What is the net present value of project : a) What is the net present value of this project?
Create a flowchart with dual alternative decision structure : Write the pseudocode using If-Then-Else statements and create a flowchart with a dual alternative decision structure for the following example.
What is the amount if you pay for the washing : What is the amount if you pay for the washing machine today?
Arithmetic and geometric returns for the stock : A stock has had returns of 10 percent, 28 percent, 15 percent, -16 percent, 28 percent, and -6 percent over the last six years.
What statutory rights does company : What statutory rights does company "x" has against company "xy" and what does it needs to prove?

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd