What is the risk adjusted npv of the project

Assignment Help Financial Accounting
Reference no: EM132557800

Company Y has conducted a risk assessment on a project it is considering. The company adjusts its WACC by adding a risk premium based on the coefficient of variation of a project as follows:

CV Adjustment 0% -50% -1%
50% - 70% 0%
71% - 90% 3%

The project has a coefficient of variation of 80% associated with it. The project has the following net cash flows associated with it:

Year 0        Year 1       Year2          Year 3 -

R100         R50                R20              R30

Year 4 R40

Year 5 R60

Question 1: The company has a WACC of 15%. What is the risk adjusted NPV of the project?

Reference no: EM132557800

Questions Cloud

How might be accounted for within the context : Critically evaluate why there are different recognition criteria for tangible non-current assets when compared with intangible assets.
Prepare journal entries for each of preceding transactions : New equipment purchased for 16,000. Prepare, in good form, journal entries for each of the preceding transactions
Calculate the cost of common equity financing : Calculate the cost of common equity financing using Gordon Model. Company's dividends are expected to grow at an annual rate of 5% forever.
Discussing testing for sexually transmitted infections : Imagine a scenario in which you and a new partner are discussing testing for sexually transmitted infections.
What is the risk adjusted npv of the project : The company has a WACC of 15%. What is the risk adjusted NPV of the project? Company Y has conducted a risk assessment on a project it is considering.
Calculate the manufacturing cost per unit : During 2020, Rafael Corp. produced 35,910 units and sold 35,910 for $14 per unit. Calculate the manufacturing cost per unit
Find and calculate the firm weighted average cost of capital : Find and Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system. Calculate the total market value of firm
How much did the loan cost : The loan was repaid by payments of $4000 on June 20, $3000 on September 1, and the balance on November 15. How much did the loan cost
About effects of back squat vs. front squat : Will a research topic about effects of back squat vs. front squat on vertical jump performance be best served by quantitative approaches?

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