Question
In: Finance
You are a consultant to a large manufacturing corporation that is considering a project with the...
You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars):
| Years from Now | After-Tax Cash Flow |
| 0 | –40 |
| 1–10 | 14 |
The project's beta is 1.9.
a. Assuming that rf = 6% and E(rM) = 12%, what is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 5 months agoRelated Solutions
You are a consultant to a large manufacturing corporation that is considering a project with the...
You are a consultant to a large manufacturing corporation that
is considering a project with the following net after-tax cash
flows (in millions of dollars):
Years from Now
After-Tax Cash Flow
0
-100
1-10
18
The project's beta is 1.1.
a. Assuming that rf = 5%
and E(rM) = 10%, what is the net
present value of the project? (Do not round intermediate
calculations. Enter your answer in millions rounded to 2 decimal
places.)
Net Present Value
b. What is...
You are a consultant to a large manufacturing corporation that is considering a project with the...
You are a consultant to a large manufacturing corporation that
is considering a project with the following net after-tax cash
flows (in millions of dollars):
Years from Now
After-Tax Cash Flow
0
–90
1–10
17
The project's beta is 1.2.
a. Assuming that rf = 4%
and E(RM) = 11%, what is the net present value of
the project? (Do not round intermediate calculations. Enter
your answer in millions rounded to 2 decimal places.)
b. What is the highest possible...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars):
Years from Now
After-Tax CF
0
–24
1–9
10
10
20
The project's beta is 1.8. Assuming rf = 4% and
E(rM) = 14%
a. What is the net present value of the
project? (Do not round intermediate calculations. Enter
your answer in millions rounded to 2 decimal
places.)
b. What is the highest possible beta estimate...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars).
Years From Now
After-tax CF
0
-36
1-9
12
10
24
The project's beta is 1.5. Assuming rf = 4% and E(rm) = 12%
a. What is the net present value of the project? (Do not round
intermediate calculations. Enter your answer in millions rounded to
2 decimal places)
b. What is the highest possible beta estimate...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars): Years from Now After-Tax CF 0 –36 1–9 12
10 24 The project's beta is 1.5. Assuming rf = 4% and E(rM) = 12%
a. What is the net present value of the project? (Do not round
intermediate calculations. Enter your answer in millions rounded to
2 decimal places.) Net present value 24.72 million b. What is...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars):
Years from Now
After-Tax CF
0
–23
1–9
10
10
20
The project's beta is 1.7. Assuming rf = 6%
and E(rM) = 16%.
a.
What is the net present value of the project? (Do not
round intermediate calculations. Enter your answer in millions
rounded to 2 decimal places.)
Net present value
million
b.
What is the...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars):
Years from Now After Tax CF
0 -38
1-9 12
10 24
The project's beta is 1.4. Assuming rf = 6% and E(rM) = 16% a.
What is the net present value of the project? (Do not round
intermediate calculations. Enter your answer in millions rounded to
2 decimal places.) b. What is the highest possible beta...
You are a consultant to a large manufacturing corporation considering a project with the following net...
You are a consultant to a large manufacturing corporation
considering a project with the following net after-tax cash flows
(in millions of dollars): Years from Now After-Tax CF 0 –36 1–9 12
10 24 The project's beta is 1.5. Assuming rf = 4% and E(rM) = 12%
a. What is the net present value of the project? (Do not round
intermediate calculations. Enter your answer in millions rounded to
2 decimal places.) Net present value million b. What is the...
You are a consultant to a mid-sized manufacturing corporation that is considering an investment project. The...
You are a consultant to a mid-sized manufacturing corporation
that is considering an investment project. The project requires an
initial investment of $100 million and will generate an after tax
cash of $20 million in the first year and the cash flow will
increase 5% thereafter every year (Please note that this is a
constant growing cash flow).The project’s beta is 1.5. Assuming
that rf=5% and E ( rM ) = 12%, Please answer the following
questions.
What is the...
You are an analyst for a pipe manufacturing corporation that is considering a new project which...
You are an analyst for a pipe manufacturing corporation that is
considering a new project which involves fabricating some custom
pipe for a single customer. The project will take advantage of
excess capacity in an existing plant. The plant has the capacity to
produce 50,000 units of 18-inch pipe, but only 25,000 are being
produced currently. Sales of 18-inch pipe are expected to increase
by 10% a year. You want to use some of the remaining capacity to
manufacture 20,000...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Steven has learned how stress affects his physical health, so now he is trying to reduce...
- You manage a risky portfolio with expected rate of return of 12% and a standard deviation...
- 1) a. Write down a C++ program which will create a list (simple linear linked list)...
- What is the difference between cross-site scripting (XSS) attack and cross-site request forgery (XSRF) attack?
- Write a JAVA program read a number within the range of 1 through 1000 to display...
- 1) a. Write a C++ program for the recursive algorithm that removes all occurrences of a...
- *C programming* My friend Steve wants to buy something nice for himself. He doesn't know want...
ADVERTISEMENT