What is the npv of the investment opportunity

Assignment Help Financial Management
Reference no: EM131962233

You are considering investing in a start up company. The founder asked you for $260,000 today and you expect to get $1,060,000 in 14 years. Given the riskiness of the investment opportunity, your cost of capital is 25%. What is the NPV of the investment opportunity? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. What is the NPV of the investment opportunity? The NPV of the investment is $ ? nothing. (Round to the nearest dollar.)

Reference no: EM131962233

Questions Cloud

Compute the yield to maturity : Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, Compute the yield to maturity.
The replacement value of cornwallis : Cornwallis Company has replacement value assets of 100 and liabilities of 65. The replacement value of Cornwallis is
The alternative use of cash and bank balance with infosys : What are the alternative use of cash and bank balance with Infosys? In your answer you should come up with at least five alternatives.
What is the irr of investment opportunity : What does the IRR rule say about whether you should invest? What is the IRR of this investment opportunity?
What is the npv of the investment opportunity : What is the NPV of the investment opportunity? The NPV of the investment is $ ? nothing
How are contracts settled-by delivery or by cash settlement : How are these contracts settled? By delivery or by "Cash settlement"?
Company used the bond-yield-plus-risk-premium method : What would be the cost of using retained earnings if the company used the bond-yield-plus-risk-premium method?
Compute the amount of the down payment-amount to be financed : Compute the Amount of the down payment, Amount to be financed, Amount added each month for property tax, Amount added each month for insurance
What is the portfolio beta : Stock 2 is worth $7,000 and has a beta of 1.1. Stock 3 is worth $15,000 and has a beta of 1.4. What is the portfolio beta?

Reviews

Write a Review

Financial Management Questions & Answers

  The risky asset and the risk-free asset

You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6%. The slope of the capital allocation..

  What is the company after-tax operating income

What is the company’s economic value added? What is the company’s total capitalization? What is the company’s after-tax operating income?

  About the calculating investment returns

You bought one of Rocky Mountain Manufacturing Co.’s 9 percent coupon bonds one year ago for $1,052.30. These bonds make annual payments and mature seven years from now. Suppose that you decide to sell your bonds today, when the required return on th..

  What is the average corporate beta for the projects

What is the average corporate beta for the projects? Is this consistent with the theory or corporate betas? Why or why not?

  Discuss why eurobonds make up the lion''s share

Describe the differences between foreign bonds and Eurobonds. Also discuss why Eurobonds make up the lion's share of the international bond market.

  Company used the bond-yield-plus-risk-premium method

What would be the cost of using retained earnings if the company used the bond-yield-plus-risk-premium method?

  Using present worth analysis of cash flows from project

A company is considering purchasing a new computerized management information system. During the first year of the project, company engineers must spend time to customize software for this project at a cost of $20,000. There will also be some additio..

  What is maximum you should be willing to pay for investment

What is the maximum you should be willing to pay for this investment?

  Using all three methods using these interest rates

Calculate the MIRR of the project using all three methods using these interest rates.

  What is the journal entry

What is the Journal Entry? The office manager in San Diego ordered $350 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI’s office.

  What is the advantage of using forward contracts

Suppose that you are a financial manager of a company that exports mainly to England. You expect to receive a huge payment in British pounds from your customer in a couple of months. To avoid the potential adverse move of British pound, you have deci..

  Firm can increase its annual customer retention rate

What is the impact on lifetime value if a firm can increase its annual customer retention rate from 50% to 75%,

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