NPV

Project L costs $50,000, its expected cash inflows are $14,000 per year for 9 years, and its WACC is 9%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

1. You are going to invest $18,000 equally in a portfolio consisting of Assets Z, D, and W, as follows: Calculate the beta of the portfolio containing assets ZDW.

1. 1.60
2. 2.40
3. 2.00
4. 1.50

Beechtree Furniture Company is considering adding a new line to its product mix. The production line would be set up in unused space in Beechtree’s main plant. The machinery’s invoice price would be approximately $250,000; another $15,000 in shipping charges would be required; and it would cost an additional $18,000 to install the equipment. Further, the firm’s inventories would have been increased by $22,000 to handle the new line. The machinery has an economic life of 4 years and will be the depreciated fully using the straight-line method. The machinery is expected to have a salvage value of $10,000 after 4 years of use. The new line would generate $72,000 in incremental sales and $48,000 in incremental costs (before taxes and excluding depreciation) in each of the next 4 years. The firm’s tax rate is 25 percent, and its overall weighted average cost of capital is 12 percent.

A. What is Beechtree's net investment outlay on this project (yr 0)?

b. What are the net cash flows for the first year (yr 1) of the project?

C. If the project is terminated at the end of yr 4 and the machine is sold for the expected salvage value, what is the net cash flow at the time the project is terminated?

Berkshire Building Services generated $98 million in sales during the current year, and its year-end total assets were $118 million. Also, at year-end, current liabilities were $5,895,000 consisting of $3,144,000 of accounts payable, $1,572,000 of accruals, and $1,179,000 of notes payable. The firm’s profit margin was 7% and payout ratio was 38%. The firm considered itself at full capacity in the current year. Looking ahead to next year, estimate the additional funds needed if the firm intends to grow sales by 8%.

1. A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table below. The firm’s cost of capital is 10 percent. If the projects have five-year lives, the range of the net present value for Project B is approximately __________.

1. $254,894
2. $37,908
3. $303,263
4. $80,000

Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project M Time: 0 1 2 3 4 5 Cash flow: –$1,800 $510 $640 $680 $760 $260

16.  Problem 19.17 (Foreign Capital Budgeting)

Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2,000 and a cash inflow the following year of $2,400. Sandrine estimates that its risk-adjusted cost of capital is 11%. Currently, 1 U.S. dollar will buy 0.85 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 2%, while similar securities in Switzerland are yielding 1%.

1. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round the net present value to the nearest cent and rate of return to two decimal places.

   NPV = $  

   Rate of return =   %

2. What is the expected forward exchange rate 1 year from now? Do not round intermediate calculations. Round your answer to two decimal places.

     Swiss franc (SF_r) per U.S. $

3. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine? Do not round intermediate calculations. Round the net present value to the nearest cent and rate of return to two decimal places.

   NPV =   Swiss francs

   Rate of return =   %

You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. Year Fund Market Risk-Free

2011 –20.0 % –38.5 % 1 %

2012 25.1 20.9 4

2013 13.8 13.6 2

2014 7.4 8.4 6

2015 –2.04 –4.2 2

What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

You’ve collected the following information from your favorite financial website.

According to your research, the growth rate in dividends for SIR for the next five years is expected to be 20 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent indefinitely. Assume investors require a return of 14 percent on SIR stock.

According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Current stock price            $

Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?

Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have conflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why? P.S. I saw some answers on Chegg but I didn't like them, please do not use them

A stock has a beta of 0.9 and an expected return of 11 percent. A risk-free asset currently earns 3.5 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.29, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. If a portfolio of the two assets has an expected return of 11.75 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 4 decimal places.) d. If a portfolio of the two assets has a beta of 1.38, what are the portfolio weights?

The expected return and standard deviation of a portfolio that is 40 percent invested in 3 Doors, Inc., and 60 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) 15 % 14 % Standard deviation, σ 58 32 What is the standard deviation if the correlation is +1? 0? −1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )

what is the IRR for the following project if its initial after tax cost is $5000000 and it is expected to provide after tax operating cash inflows of $1800000 in yr 1, $1750000 in yr 2, $1680000 in yr 3 and $1300000 in yr 4?