Which can be assumed to be permanent investment

Assignment Help Financial Management

Reference no: EM132018138

A city agency is debating if they should build a new transit line - which can be assumed to be a permanent investment. It is expected that the initial/first costs will be $200 M. It will require maintenance and operations costs of $8 M per year. Annual revenues are projected to be $15 M in the rst year increasing by 100,000 each year thereafter. Should the agency build the line given a minimum rate of return of 5% per year?

Reference no: EM132018138

Questions Cloud

Calculate the expected return on each stock : Calculate the expected return on each stock. what is the expected market risk premium?

Dividends and earnings to grow at constant rate : The Let'sThinkBig Company expects their dividends and earnings to grow at a constant rate of 5% a year into the foreseeable future.

What would happen to weight of debt-weight of common stock : What would happen to the weight of debt, weight of common stock, and WACC, if the interest rates are lower now than when the bonds were issued?

What would the risk-free rate have to be for the two stocks : What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

Which can be assumed to be permanent investment : A city agency is debating if they should build a new transit line - which can be assumed to be a permanent investment.

Transportation network services-uber vs. lyft vs. taxis : Local transportation options have expanded recently due to the launch of Uber and Lyft; these services seek to address some of the problems with taxi services.

Estimated intrinsic value of equity on price-per-share basis : What is its estimated intrinsic value of equity on a price-per-share basis?

Discuss the main financial service : discuss the main financial service(s) each provides, list and explain the financial instrument(s) each deals with,

What is your best estimate of the company cost of equity : Using the dividend discount model, what is your estimate of the company's cost of equity? What is your best estimate of the company's cost of equity?

User Account

All Pages