User Account

All Pages

What is the npv of the proposed project

Assignment Help Other Subject
Reference no: EM133233644

Your Company needs to purchase new machine to meet the demand for its product. The cost of the equipment is $300,000. It is estimated that the firm will increase operating cash flow (OCF) by $75,000 annually for the next seven years. The firm is financed with 50% debt and 50% equity, both based on market values. The firm's cost of equity is 12% and its pre-tax cost of debt is 8%. The flotation costs of debt and equity are 3% and 7%, respectively. Assume the firm's tax rate is 30%. (Mark 30, 8 for each sub-question)

(A) What is the firm's WACC?

(B) Ignoring flotation costs, what is the NPV of the proposed project?

(C) What is the weighted average flotation cost, fA, for the firm?

(D) What is the dollar flotation cost of the proposed financing?

(E) After considering flotation costs, would you accept the project?

Reference no: EM133233644

Questions Cloud

Description of the tourism-hospitality establishment : Conceptualize a tourism or hospitality establishment including its services. Make a short description of the tourism/ hospitality establishment and its service.
Mean and volatility of gbp-usd exchange rate growth : If the Fed keeps the short-term interest rate unchanged, the USD will appreciate by 6% with respect to GBP. Compute the mean and volatility of GBP/USD exchange
Research about tourism : Research about tourism and hospitality establishments on how they do initial customer approach and handle complaint.
Higher the coupon rate on the debt : Considering you are a CFO of Home Depot Group Office according to the capital structure theories we examined, a firm benefits by having debt since the interest
What is the npv of the proposed project : Your Company needs to purchase new machine to meet the demand for its product. The cost of the equipment is $300,000. It is estimated that the firm will increas
Describe how use the cycle of measurement : Describe how you use the cycle of measurement, assessment, and improvement to evaluate and make changes in your own healthcare discipline (i.e. Dentistry)?
Why understanding propaganda is crucial in study of politics : BUT can anything that manipulates the way you think or the decisions you make be good? Explain why understanding propaganda is crucial in the study of politics.
Achieve long-term financial goals : Think about 2 or 3 long-term financial goals you have in your own life (e.g., savings account amounts, a trip, retirement, paying off debt, etc.). As you read t
Explain adjustable rate mortgage : Assume that a lender offers a 30-year, $147,000 adjustable rate mortgage (ARM) with the following terms:

Reviews

Write a Review

Other Subject Questions & Answers

  Predominantly inattentive

Children with ADHD Predominantly Inattentive Type often appear to not be listening while teachers provide instruction. This same "day-dreaminess" may be noted in children with anxiety disorders

  Unlawful behavior that causes public inconvenience

Match the Definitions on the left to the correct Terms on the right by entering the correct corresponding alphabetical letter next to the numbers in the first column. Not all terms will be used.

  Describe how deviance is defined by people in power

Conflict theorists describe how deviance is defined by the people in power. Describe how power and wealth shaped the outcome of a deviant act or a crime.

  Different leadership behaviour orientations

Differentiate between the different leadership behaviour orientations and Detail the contribution of positive psychology and strengths-based leadership

  What is an autoimmune disease?

What is an autoimmune disease?

  Analyze supplementary aids and services education program

Analyze ways to address the needs of students within this disability category strategies, accommodations, modifications, assistive technology. Analyze supplementary aids and services and/or related services that may be included in the individualiz..

  Discussion about the skills and knowledge

Discussion about the skills and knowledge which they look for when hiring employees, and their view on the current state and the future of the Australian

  What you believe would be necessary to create a culture

Brainstorm about what you believe would be necessary to create a culture that would be supportive of using research evidence in practice. Support your answers.

  Explain the aspects of the effectiveness of humor

Use both the Cline and Kellaris (1999) and Lyttle (2001) articles (located in the ProQuest database) as the basis for your observations.

  Cultural emphasis on scared ideologies

How do the main scared genres of this time(chant, the mass ordinary, etc) represent the cultural emphasis on scared ideologies that exemplified the middle ages?

  Complete an asset management register for the assets

EVT207A Event Venue Management Assignment - Asset and maintenance register, Torrens University, Australia. Complete an Asset Management Register for the assets

  The substitution-of-foreign-goods effect

Can the natural level of real output ever change? If so, when? How is the natural level of real output related to the long-run aggregate supply curve?

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