1. the concept of net present value, and how it is calculated.
2. the net present value rule.
3. What do you understand by the concept 'internal rate of return'?
4. How is the net present value different from the internal rate of return?
5. A business proprietor sells on average $8000 worth of gasoline on rainy days and an average of $9500 on clear days. Statistics from the local meteorological station indicates that the probability is 0.76 for clear weather, and 0.24 for rainy weather on Sunday. Find the expected value of gasoline sales on Monday. Explain your calculations using one slide
In: Finance
Question N1 - XYZ is considering a 3-yr project. The initial outlay is $120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the annual cash flow increases to $57,000 instead? Re-calculate the NPV.
Question N2 - Six years ago, XYZ Company invested $51,959 in a new machinery. The investment in net working capital was $4,716 which would be recovered at the end of the project. Today, XYZ Company is selling the machinery for $24,092. Today, the book value of the machinery is $11,215. The tax rate is 26 percent. What are the terminal cash flows in Year 6?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box
In: Finance
was there any synergy and follow up implementation to the AOL - TIME WARNER MERGER?
In: Finance
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be
$2,000,000,
and the project would generate incremental free cash flows of
$650,000
per year for
5
years. The appropriate required rate of return is
9
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be accepted?
In: Finance
Carraway Seed Company is issuing a
1,000
par value bond that pays
6
percent annual interest and matures in
8
years. Investors are willing to pay
$935
for the bond. Flotation costs will be
11
percent of market value. The company is in a
20
percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
In: Finance
Hi there,
I am going to plan of a start-up "Fruits and vegetables organic " store
So Can you help me to plan "Business Model Canvas" (understanding of BMC will not be assessed in this assessment.)
If it is possible can you give me 1 reference as well please?
ex: Heidarkhani, A., & khomami, A.A, & Jahanbazi, Q.,& Alipoor, H. (2013). The Role of Management Information Systems ( MIS ) in Decision-Making and Problems of its Implementation, Universal Journal of Management and Social Sciences, Vol. 3, No. 3, pp. 78-89
Thanks a lot
In: Finance
| Northeast Hospital is analyzing a potential project for a new outpatient center | ||||||||||
| Please use the following facts to create a 5-year projection of cash flow for the proposed center. Please create your full income statement first to include all cash and non-cash expenses | ||||||||||
| Calculate the projects NPV, IRR, MIRR, Payback Period (not discounted). Using these calculations, do you recommend that they should proceed with this project? Explain your answer | ||||||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||||
| Total projected Visits | 52500 | |||||||||
| Average Revenue per visit | $ 75.00 | |||||||||
| Average Variable Cost per Visit | $ 50.00 | |||||||||
| Total Fixed Costs | $ 500,000.00 | |||||||||
| Purchase Price for Equipment | $ 4,500,000.00 | |||||||||
| Monthly Rental Cost to Occupy the New Site | $ 5,000.00 | |||||||||
| Salvage Values of the Equipment (end of Year 5) | $ 750,000.00 | |||||||||
| Corporate Tax Rate | 40% | |||||||||
| Cost of Capital | 8% | |||||||||
| Other Assumptions | ||||||||||
| 1) Projected Visits are Expected to increase by 10% in Year 2, 5% in Year 3 and 3% each Year thereafter | ||||||||||
| 2) Negotiation with payers indicate that revenue rate (ie payment per visits) will increase by 2% each year and 5% in year 5 | ||||||||||
| 3) Variable Costs are expected to rise at a rate of 2% per year | ||||||||||
| 4) Fixed Costs are expected to rise at a rate of 1% per year | ||||||||||
| 6) Rent rates will be increased by 2.5% at the end of each year | ||||||||||
| 6) The equipment will depreciate based on the straight-line method of depreciation, a 5-year estimated life and the equipment will be sold at salvage value at the end of year 5 | ||||||||||
| 7) Tax rate will remain constant for the entire 5-year Period and do not assume any tax loss carryforward | ||||||||||
In: Finance
What are the assumptions of the Black-Scholes Option Pricing Model? Discuss each assumption
In: Finance
KFA is considering investing in a new drone technology costing $12 million. It has a 5 year life (no salvage value) and will save KFA $3.5 million/year in pre-tax operating costs. It will need an up-front working capital investment of $300,000. KFA's cost of capital is 8.0% and its tax rate is 21.0%. Their current technology has a $5 million book value but a $1 million salvage value. What are the NPV and IRR of the decision to replace the old technology?
In: Finance
KFA expects to pay the following dividends over the next 4 years: $3.00, $4.00, $5.00, and $6.00. After that, it expects to pay dividends that grow at 4%/year. If the required equity return is 15%, what should be today's share price?
In: Finance
KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon paid semi-annually. Calculate its price for each of the following three YTM scenarios: 4.0%, 6.0%, and 8.0%.
In: Finance
The following financials are presented for Apple, Inc. for the years 2017 and 2018. (All values in USD million)
|
2018 |
2017 |
|
|
Cash and cash equivalents |
25,913 |
20,289 |
|
Marketable securities |
40,388 |
53,892 |
|
Accounts receivable, net |
23,186 |
17,874 |
|
Inventories |
3,956 |
4,855 |
|
Other current assets |
37,896 |
31,735 |
|
Total current assets |
1,31,339 |
1,28,645 |
|
Total non-current assets |
2,34,386 |
2,46,674 |
|
Total Assets |
$3,65,725 |
$3,75,319 |
|
Current liabilities: |
||
|
Accounts payable |
$55,888 |
$44,242 |
|
Other current liabilities |
60,978 |
56,572 |
|
Total current liabilities |
$1,16,866 |
$1,00,814 |
|
Total non-current liabilities |
1,41,712 |
1,40,458 |
|
Total liabilities |
2,58,578 |
2,41,272 |
|
Common Stock |
40,201 |
35,867 |
|
Retained Earnings |
66,946 |
98,180 |
|
Total shareholders' equity |
1,07,147 |
1,34,047 |
|
Total liabilities and shareholders' equity |
3,65,725 |
3,75,319 |
|
Net Sales |
2,65,595 |
2,29,234 |
|
Cost of Sales |
1,63,766 |
1,41,048 |
Required:
In: Finance
James Horner is considering an investment scheme, to fund his house purchase after 6 years, with following cash deposits for a period of 6 years.
|
Year |
1 |
2 |
3 |
4 |
5 |
6 |
|
Cash deposit ($) |
10,000 |
12,000 |
14,000 |
16,000 |
18,000 |
20,000 |
In: Finance
Bonus Value. You have a bond that pays $ 100 of annual interest, with a value of $ 1,000 and matures in 15 years. Your required rate of return is 12%.
a. Calculate the value of the bonus
b. How does the value change if your required rate of return:
1. Increase to 15%
2. Decrease to 8%
In: Finance
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,200 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. b. What is the IRR of the after-tax cash flows for each company?
In: Finance