When making its decision on accepting the new project

Assignment Help Financial Management

Reference no: EM131596087

Marcal Corporation is considering a silver mining project would cost $18 million today and generate positive cash flows of $3.5 million a year at the end of each of the next 10 years. The project's cost of capital is 12%. a. Calculate the project's NPV if the company proceeds now... b. The company is fairly confident about its cash flow forecast, but expects to have better price information in 2 years. The company believes the cost would be $19 million in 2 years. It estimates there is a 50% change CFs will be $4 million for 10 years and a 50% change CFs will be $2 million for 10 years. Should the company proceed with the project now or wait 2 years until it has better information? c. Apart from the calculations above, discuss 3 qualitative factors that the company should consider when making its decision on accepting the new project.

Reference no: EM131596087

Questions Cloud

Discuss the confidentiality issues : You have learned that managing a center for addictions and recovery is a daunting task. You are opening the doors to the center today.

Calculate the current ratio and quick ratio : Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret the ratios that you calculated

The five basic principles of finance include : The five basic principles of finance include all of the following EXCEPT

Adequate rules and regulations : It is agree that adequate rules and regulations will ensure that the organization is run the most effective way.

When making its decision on accepting the new project : discuss 3 qualitative factors that the company should consider when making its decision on accepting the new project.

Illustrate the workings of the adversary system : The Fourth Amendment of the U.S. Constitution limits the power of the police to make arrests, search people and their property, and seize objects.

How does hollywood conceptualize sexuality : Discuss the following with your peers: How does Hollywood conceptualize sexuality? The old adage is "Sex sells." Is this true of Hollywood films?

Compute the overhead controllable variance : World Company expects to operate at 80% of its productive capacity of 55,000 units per month. Compute the overhead controllable variance

Who bears more risk with best efforts deal : Who bears more risk with a best efforts deal, the company or the investment banker? Why?

User Account

All Pages