What level of sales should she be willing to abandon project

Assignment Help Financial Management
Reference no: EM131991194

Margerit is reviewing a project with projected sales of 1,500 units a year, a cash flow of $40 a unit and a three-year project life. The initial cost of the project is $95,000. The relevant discount rate is 15 percent. Margerit has the option to abandon the project after one year at which time she feels she could sell the project for $70,000. At what level of sales should she be willing to abandon the project?

Reference no: EM131991194

Questions Cloud

What would be the time adjustment in sale comparison grid : what would be the time adjustment in the sale comparison grid? Hint: the question asks you for the adjustment amount, NOT the adjusted sale price.
What would you expect large cap stocks to return : U.S. Treasury bills currently yielding about 0.50%, what would you expect large cap stocks to return in the next 5 years or so?
What is the fund required rate of return : If the market's required rate of return is 10% and the risk-free rate is 3%, what is the fund's required rate of return?
Define the efficient market hypothesis : Define the efficient market hypothesis (EMH). What are the implications of EMH for corporate managers?
What level of sales should she be willing to abandon project : At what level of sales should she be willing to abandon the project?
Average beta of the new stocks added to the portfolio : What should be the average beta of the new stocks added to the portfolio?
What is income after taxes and the profit margin : What is income after taxes and the profit margin for 2014? Compute the Profit margin in 2013
What would happen to the stock required rate of return : If the market risk premium increased to 7%, what would happen to the stock's required rate of return?
Opportunity to expand their mold remediation operation : Eagles LLC has an opportunity to expand their mold remediation operation. Calculate the weighted average cost of capital (WACC) for Eagle LLC.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the effective interest rate on the libor loan

Dr. Ruth is going to borrow $8,400 to help write a book. The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 8 percent and LIBOR 1.3 percent less. Also assume there will be a $48..

  Assume that the bond has just been issued

A 7-year, 11.00% semiannual coupon bond with a par value of $1000 may be called in 5 years at a call price of $1,155.00. The bond sells for $970.50. (Assume that the bond has just been issued.). What is it’s yield to maturity?

  Target capital structure without issuing additional shares

WACC Estimation On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $15 million in new projects. Assuming there is sufficient cash flow such that Tysseland can maintain..

  What is it about the firms that use low amounts of debt

There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing. Based on the types of firms that use ..

  What is current intrinsic value of plastic pretzels stock

Stockholders require a return of 12.80% on this stock. What is the current intrinsic value of Plastic Pretzels stock?

  Own business and is considering an investment

Marian Plunket owns her own business and is considering an investment. What is the NPV of this opportunity if the interest rate is 10% per? year?

  What was the price of this bond when it was? issued

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until? maturity, a face value of $1,000? and a coupon rate of 7.8% ?(annual payments). The yield to maturity on this bond when it was issued was 6.3%. What was the price o..

  What is the annualized yield on the dollar deposit

The treasurer of a U.S company has $1,000,000 to invest for 30 days. A 30-day euro deposit yields 2.00 percent. The present exchange rate of € is $1.1550. What is the annualized yield on the dollar deposit in the euro market if the exchange rate of €..

  Calculate each stock coefficient of variation

Your research has determined the following information about the common stock of two particular firms. Explain what is meant by the stock’s “Expected Return”. Calculate each stock’s coefficient of variation.

  Is the bond trading at par or at discount or premium

What is the bond's current yield? Is the bond trading at par, or at a discount or a premium?

  Book value to be increased to its estimated market value

United Kingdom allows an asset's book value to be increased to its estimated market value. Why do you think a company's management would want to write up the value of its assets? What impact would such a write-up have on the balance sheet and the inc..

  What will be required return on portfolio

You have been managing $5 million portfolio that has beta of 1.45 and required rate of return of 10%. what will be required return on $5.5 million portfolio?

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