What is the profitability index on investment

Assignment Help Financial Management
Reference no: EM132029218

Suppose you have developed the following information for a potential investment: current market value is $1,200,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 12%.

a. What is the internal rate of return on this potential investment?

b. What is the profitability index on this investment?

Reference no: EM132029218

Questions Cloud

Planning the implementation of windows : Gigantic Life Insurance is planning the implementation of Windows 10 for their internal staff. As part of the migration process, you want to standardize
Calculate the ex post financing cost in USD : Suppose the GBP actually strengthens to 1.62. Calculate the ex post financing cost in USD.
What is the total amount needed for the trip : What is the total amount needed for the trip? How many U.S. dollars will you need to convert to Australian dollars to reach this amount?
What are all the architecture styles that is used : What are all the architecture styles that is used in Zookeeper?
What is the profitability index on investment : What is the internal rate of return on this potential investment? What is the profitability index on this investment?
How trustworthy and easy the sites appear to be : Explore two different job search websites. Compare how trustworthy, useful, and easy the sites appear to be. Consider which site performed better.
What does inodes used in linux and ntfs : What does Inodes used in Linux and NTFS. Are they the same? If not, which one do you feel is better?
What is the required return of the portfolio : What is the beta of your portfolio? What is the required return of the portfolio?
Group policies and the group policy editor : What are the various aspects of Windows Group Policies and the Group Policy Editor.

Reviews

Write a Review

Financial Management Questions & Answers

  How much money will steven have earned in interest

How much money will Steven have earned in interest after one year?

  Discuss the main differences-preferred stocks and bonds

Discuss the main differences, preferred stocks, and bonds. Describe the main differences between an over-the-counter market and an organized exchange.

  Calculate the value of a 1 year average price call

Use the results in the appendix to calculate the value of a 1-year average price call where the strike price is 900 and the index level is observed at the end of each quarter for the purposes of the averaging.

  Many academic institutions offer a sabbatical policy

Many academic institutions offer a sabbatical policy. Assume that the sabbatical annual salary is paid in one lump sum every 7 years.

  Calculate aftertax cash flows for first year for each bond

Suppose your company needs to raise $42 million and you want to issue 25-year bonds for this purpose. Assume the required return on your bond issue will be 7 percent, and you’re evaluating two issue alternatives: Calculate the aftertax cash flows for..

  Net profit after tax is defined

On the income statement, net profit after tax is defined as: operating profit minus operating expenses operating profit minus cost of goods sold operating profit minus interest operating profit minus total expenses none of the above

  What is the monthly break-even of the new shop

hat is the monthly break-even of the new shop. The Falls in units and B) in dollars?

  Calculate marginal cost of capital

Calculate Ulwind’s MCC (marginal cost of capital) assuming that (1) it wants to maintain its current capital structure and (2) it will have to issue new shares of both preferred and common stock

  Bought a bond with an annual coupon rate

Suppose you bought a bond with an annual coupon rate of 7.6 percent one year ago for $840. The bond sells for $885 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nomin..

  What is the coupon rate on the bond

A bond sells today for $1010. The bond has a YTM of 6.55% and matures in 12 years. What is the coupon rate on the bond?

  What would your portfolio new beta be

Use the proceeds to buy another stock with a beta of 1.02. What would your portfolio's new beta be?

  Reported on the commission year-end balance sheet

how would the unspent $20 million be reported on the Commission's year-end balance sheet?

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