What is the NPV

Assignment Help Financial Accounting
Reference no: EM132937078

Question - The common stock of ABX, Inc. has a beta of 0.90. The Treasury bill rate is 4% and the market risk premium is estimated at 8%. The debt-to-equity ratio of the company is 0.35, the cost of debt is 6%, and the tax rate is 21%. The company is considering a project that will result in initial after-tax cash savings of $5 million at the end of the first year, and these savings will grow at a rate of 4% per year indefinitely. The project is less risky than the usual project the firm undertakes. Management uses the subjective approach and applies an adjustment factor of -1% to the overall cost of capital for similar projects. If the project requires an initial investment of $20 million, what is the NPV?

Reference no: EM132937078

Questions Cloud

What is the total incremental costs for accepting the order : Imperial Jewelers manufactures and sells a gold bracelet for $404.00. What is the total incremental costs for accepting the order
How much of a loan would the borrower qualify for : The bank is offering a loan based on a 1.8 DSCR target, interest-only at a rate of 5.25%. How much of a loan would the borrower qualify for
What is beginning balance in allowance for doubtful accounts : The company estimates that 10% of its outstanding receivables will be uncollectible. What is the beginning balance in allowance for doubtful accounts
What is the net present value of the norwegian project : What is the net present value of the Norwegian project? Assume that B Corporation is considering the establishment of a subsidiary in Norway.
What is the NPV : The Treasury bill rate is 4% and the market risk premium is estimated at 8%. The debt-to-equity ratio of the company is 0.35, What is the NPV
What would happen to the market equilibrium price : What would happen to the market equilibrium price for airline tickets. Explain. Will the new entry result in the decline of profits of the airline industry
What are the main responsibilities of the marketing : Write an essay defining: what is marketing, what are the main responsibilities of the marketing discipline, what is a marketing plan and what is its importance.
Support the development of a new subsidiary : Task is to support the development of a new subsidiary. During the first two weeks of your stay in Mexico you experienced
What is the pre-closing balance of the allowance : The Makati branch purchased merchandise costing P317,500. What is the pre-closing balance of the Allowance for Overvaluation of Branch Inventory Account

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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