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a) Use excel of a financial calculator to estimate the IRR of the following business opportunity: Initial cost of $100,000, expected pre-tax annual cash flows of $54,000 for the next 7 years, and a 20% small business tax rate. There are no assets to depreciate but there is a yearly $25,000 pre-tax opportunity cost which recognizes the time you spend operating the business.
b) For this type of risky investment, you would normally require at least a 16% rate of return to compensate for the business risk alone. Assuming however that you can access a line of credit with a fixed rate of 6%, what is the minimum amount of debt capital ($$) that you would have borrow before the project becomes profitable to finance?
c) What is the most important difference between the NPV and IRR methodologies? Discuss briefly whether or not you feel that distinction would be important to this particular case.
Suppose you take out a loan of $10,000, repayable by five equal annual instalments. The interest rate is 10% per year. (a) How much do you need to repay per year to the nearest ce
Westbrook Inc. is financed with debt that costs it 5% (pre-tax)or $12.5m annually and expects to generate an EBITof $50m per year perpetually. The company is at its target debt/eq
What the implications of the pecking order theory?
#Minimum 100 words accepted#
Question: (a) The Mauritius Automated Clearing and Settlement System (MACSS) is the Mauritian Real-time Gross Settlement (RTGS) system. (i) Define the term gross settlement
Question: i) Compare and contrast the various types of fixed income securities. ii) ‘A new issue of callable bonds will generally carry a higher interest rate
I have been given 3 different types of projects. They state the IRR and how much the project will add. The question goes on to give a WACC with break points. The question wants
can you assist with the all the rounds in compxm exam?
Profit for the year R3 million R4 million Gross dividends R1.5 million R2 million Market value per ordinary share R4 R1.60 Number of ordinary shares 5
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