What is the weighted cost of capital

Assignment Help Financial Accounting
Reference no: EM132810810

Question -

a. What are some of the complexities related to capital projects in an international context as oppose to capital projects of a domestic nature.

b. A company is considering making a capital investment in developing a cattle farm in East Coast, Guyana. They intend to invest US$1,000,000 of which 60% would be equity at 15% cost of capital and 40% debt with the cost of debt being 8%. They expect that they would earn net income of US$250,000 per annum for the next 5 years. Annual depreciation is estimated at US$40,000 per annum.

i) What is the weighted cost of capital?

ii) What is the annual net cash inflow?

iii) Based on NPV and IRR analysis should the project be undertaken?

iv) What other factor should the company consider before making this making this investment?

Reference no: EM132810810

Questions Cloud

What is the amount of depreciation allowable : Question - In 2020, ABC Inc. has net income of $650,000 before depreciation. What is the amount of Section 179 depreciation allowable
Strategic management and planning for the private : What are the differences and similarities between strategic management and planning for the private and public sectors? Please cite sources
What organizations in the united states provide employees : In your discussion, compare these countries with what organizations in the United States provide employees. Topics to include in your comparison will include.
Analyse the organisation internal and external environment : Prior to writing a strategic plan it is necessary to analyse the internal and external environment and determining the information that will be required
What is the weighted cost of capital : Annual depreciation is estimated at US$40,000 per annum. What is the weighted cost of capital? What is the annual net cash inflow
Communication in crisis situations : Discuss how they communicated their crisis situation to the public. Provide an analysis of the communication strategy
Learning of employees in the business : Describe the importance of forces that influence working and learning of employees in the business and give examples
What advice would give a law firm to proceed fairly : What are the kinds of purchases for which you'll "spare no expense"? What kinds of purchases do you want to buy spending as little as possible?
How will you overcome language and discrimination issues : As the HRD manager of your organization, what new training programs and processes would you propose to senior management to develop effective recruiting.

Reviews

Write a Review

Financial Accounting Questions & Answers

  An extended warranty typically results in the seller

An extended warranty typically results in the seller:

  Record the entry to establish contract payable for walkway

Record the entry to establish the contract payable for the walkway. The City of Waterman established a capital projects fund for the construction of an access

  Which are true regarding the debt service fund except

Which are true regarding the debt service fund except? a special assessment debt for which the government has some obligation is paid through the debt service

  What is the consolidated sales revenue for the year ended

Entity B sold inventory to Entity A at a selling price of P 800,000 with a gross profit rate of 30% based on sales during 2020. What is the consolidated sales

  Maximum dpad tax savings for this c corporation

Katrina owns 100% of Money Corporation's stock.  Katrina's basis in the stock is $8,000.  Money Corporation has E&P of $40,000.  If Money Corporation redeems 60% of Katrina's stock for $50,000, Katrina must report dividend income of. Dodge Inc., has ..

  Prepare the stockholders equity section

The ledger of Zeta Corporation at December 31, 2012, after the books have been closed, contains the following stockholders' equity accounts.

  Briefly describe the ethical environment that led to fraud

What should the statement of owner's equity look like if there is no withdraw for the year? Describe how having a high accounts receivable turnover could be bad for a firm. Briefly describe the ethical environment that led to fraud. What specific act..

  What no-arbitrage price for one year zero coupon bond

Consider a bond with face value equal to $250,000 with a coupon rate of 8% paying two coupons per year. There are exactly eight years remaining and the yield to maturity is 8.5%. What is the price of this bond immediately before the current coupon is..

  Find the entry to close the income summary account is done

Company earned revenues of $100,000 and incurred expenses of $107,000. The entry to close the Income Summary account is done by debiting

  What is the amount of jazzs dividends received deduction

What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

  How the time value of money has an impact on the potential

How the time value of money has an impact on the potential investment returns and retirement savings of participants in both the Defined Benefit Plan

  What is the value of the ending work-in-process inventory

The following events took place at a manufacturing company for the current year: (1) Purchased $100,000 in direct materials. (2) Incurred labor costs as follows: Transferred 85% of the materials to the manufacturing assembly line. (5) Completed 70% o..

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