What is the net present value of this project

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Reference no: EM133207356

Assignment Questions -

Q1: Carrefour is expecting its new center to generate the following cash flows:

Years

0

1

2

3

4

5

Initial
Investment

($35,000,000)





Net operating cash-flow


$6,000,000

$8,000,000

$16,000,000

$20,000,000

$30,000,000

a. Determine the payback for this new center.

b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted?

Q2. What is the EAC of two projects: project A, which costs $150 and is expected to last two years, and project B, which costs $190 and is expected to last three years? The cost of capital is 12%.

Q3. A company pays annual dividends of $10.40 with no possibility of it changing in the next several years. If the firm's stock is currently selling at $80, what is the required rate of return?

Q4. Stag corp has a capital structure which is based on 50% common stock, 20% preferred stock and 30% debt. The cost of common stock is 14%, the cost of preferred stock is8% and the pre-tax cost of debtis10%. The firm's tax rate is 40%.

a. Calculate the WACC of the firm.

b. The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $280,000 and annual cash inflows of $66,000, $320,000, and $133,000 over the next three years, respectively. What is the net present value of this project?

Q5. Discuss the best funding options for Small and Medium Business Enterprises (SMEs) in Saudi Arabia to keep cost of capital optimum.

Reference no: EM133207356

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