Question

In: Economics

XYZ Company plans to develop stores in UAE. Each new store will require an initial investment...

XYZ Company plans to develop stores in UAE. Each new store will require an initial investment of $270,000 and a monthly operating cost of $25.000. Each will 578.500 h value after 5 years. The company also estimates that a new store will bring in revenue of $40,000 each month. Using the annual worth w method in the way investment if the company's MARR is 8% per year, compounded monthly.

AW = 12,586 + investment should be rejected.

AW = $9,586 - investment should be accepted.

AW = $11,586 -- investment should be rejected.

AW = $10,586 -- investment should be accepted.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

XYZ Company has two good businesses. Each has an initial investment of $ 25,000 with each...
XYZ Company has two good businesses. Each has an initial investment of $ 25,000 with each cash flow as follows: Year Business 1 Cash Flow Business 2 Cash Flow 1                                      7,500                                       7,500 2                                      7,000                                       7,500 3                                      6,000                                       7,500 4                                      5,000                                       7,500 5                                      3,500                                       7,500 If the cost of capital is 12.5%, calculate: A. Payback Period and NPV B. In your opinion, which business is better chosen? Business 1 and Business...
XYZ Company has two good businesses. Each has an initial investment of $ 25,000 with each...
XYZ Company has two good businesses. Each has an initial investment of $ 25,000 with each cash flow as follows: Year Business 1 Cash Flow Business 2 Cash Flow 1 7,500 7,500 2 7,000 7,500 3 6,000 7,500 4 5,000 7,500 5 3,500 7,500 If the cost of capital is 12.5%, calculate: A. Payback Period and NPV B. In your opinion, which business is better chosen? Business 1 and Business 2? And Why?
Kuhn Corporation is considering a new project that will require an initial investment of $4,000,000. It...
Kuhn Corporation is considering a new project that will require an initial investment of $4,000,000. It has a target capital structure consisting of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it...
XYZ Company will invest with an initial investment of $ 1 million. The assumption of a...
XYZ Company will invest with an initial investment of $ 1 million. The assumption of a market interest rate of 5% and cash flow for 5 years is expected as in the table below: year Cash Flow 1 425.000 2 384.000 3 321.500 4 282.500 5 200.000 Calculate the payback period and Net Present Value (NPV)
A company is considering investing in a project that will require an initial investment of $535k,...
A company is considering investing in a project that will require an initial investment of $535k, a dismantling cost after 10 years of $1.6M, and will bring in a positive cash flow at the end of each of the 11 years of $210k. The company has an expected internal return rate of 12%. Show using the Equivalent Rate of Return (ERR) method whether the company should make the investment.
Kuhn Co. is considering a new project that will require an initial investment of $4 million....
Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it...
The manager of Keebee, Inc. is considering a new project that would require an initial investment...
The manager of Keebee, Inc. is considering a new project that would require an initial investment of $1,197,810.  The cost of capital or the required rate of return of this company is 10 percent.  This project will generate an annual cash inflow of $300,000 in the following five years.   Calculate the net present value (NPV) of this project.  Indicate whether or not this project is acceptable. Calculate the internal rate of return (IRR) of this project.
Kuhn Co. is considering a new project that will require an initial investment of $45 million....
Kuhn Co. is considering a new project that will require an initial investment of $45 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it...
Kuhn Co. is considering a new project that will require an initial investment of $4 million....
Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 35% debt, 2% preferred stock, and 63% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it...
Kuhn Co. is considering a new project that will require an initial investment of $4 million....
Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1555.38. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT