What would be the value of product line

Assignment Help Financial Management
Reference no: EM132000814

Entrepreneurial Inc. is evaluating a new product launch that will cost it $26982 to launch. The company projects it will generate $693529 in annual operating cash flow at the end of each of the next 3 years, after which it will discontinue the product. The appropriate discount rate for the product is 16%.

If after the first year, the product is doing worse than expected, then the company projects annual cash flows will only be $395593 for the remaining two years of the project. What would be the value of the product line at that time (i.e. one year from now) in such a case?

Reference no: EM132000814

Questions Cloud

Competitiveness in the japanese market : What had been the impact on Pepkoe’s competitiveness in the Japanese market?
Assessing the viability of operating amusement park : You are assessing the viability of operating an amusement park. The company will not pay any taxes. The business will continue into perpetuity.
Calculate the required rate of return for un-levered firm : Calculate the required rate of return for the un-levered firm. Calculate the market value of the firm using proposition I.
Expected price per share after the offering is completed : what is the value of one right and what is the expected price per share after the offering is completed?
What would be the value of product line : What would be the value of the product line at that time (i.e. one year from now) in such a case?
Stock options that depend on the firm performance : Should the compensation consist of a dollar salary, stock options that depend on the firm’s performance, or a mix of two? If “performance” is to be considered,
What is holding period return on investment : What is the holding period return on an investment over 3 years, if in the first year the return was 5.2%, the second year it was -10% and in the third year the
Winning harrier jet was not realistic prize option : It was an example of "puffery" and that winning a Harrier Jet was not a realistic prize option?
What will be the new value of the firm : If the company permanently changes to the new capital structure, what will be the new value of the firm?

Reviews

Write a Review

Financial Management Questions & Answers

  Initial cost of the hotel project for the use of this land

The Green Tomato purchased a parcel of land six years ago for $299,500. At that time, the firm invested $64,000 grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land..

  How many years would it take an investment

How many years would it take an investment of $983 to grow to $33813 at an annual rate of return of 11%?

  Firm should do when performing ratio analysis

All of the below are things a firm should do when performing ratio analysis except:

  What is true about the firm over twenty-year period

Over the same 20 year period, quarterly dividends have also grown at 4%. What is true about the firm over this 20-year period?

  What is IRR for facebook associated with each bid

What is the IRR for Facebook associated with each bid? Is this new bid a better deal for Facebook than Cisco's original bid? Explain.

  Construct a graph of the yields from 1950 to the present

Construct a graph of the yields from 1950 to the present. Identify any time periods during which shortterm rates were higher than long-term rates.

  Different policies on the payment of dividends

Different businesses have very different policies on the payment of dividends and what that communicates to stockholders. Basically there are two ways to reward stockholders: 1) pay them via dividends and 2) pay them with capital appreciation of thei..

  How is the financing of social ventures

How is the financing of social (not-for-profit) ventures different from the financing of for-profit ventures?

  Tendering process for one of its major supply contracts

In early August, HealthCo considers a tendering process for one of its major supply contracts.

  How many more dollars of contribution margin

Digby Corp. ended the year carrying $20,263,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Digby Corp.?

  Does future or option market exist for the polish zloty

Future and Option. Does future or option market exist for the Polish Zloty?

  How might immediate corrective action have been used

What type of control - feedforward, concurrent, or feedback - do you think would be most important in this situation and how might immediate corrective action have been used in this situation

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