Question
In: Finance
TBC has two investment opportunities, A & B. A needs an initial cash outlay of$18 million...
TBC has two investment opportunities, A & B. A needs an initial cash outlay of$18 million and its internal rate of return is 20%. B needs $12 million and its internal rate of return is 10%. A is indivisible.B is also indivisble. The cost of capital is 16%. The debt/assets ratio is 40%, which is also the target ratio. This year TBC's net income is $25 million. how much dividend should be declared this year if TBC follows a residual dividend policy
Solutions
jeff jeffy answered 11 months agoRelated Solutions
18 A firm is considering an investment project which requires the initial outlay of $10 million....
18 A firm is considering an investment project which requires
the initial outlay of $10 million. The 12-year project is expected
to generate annual net cash flows each year of $1 million and have
the expected terminal value at the end of the project of $5
million. The cost of capital is 6 percent, and its marginal tax
rate is 40 percent. Calculate the profitability index of this
project.
0.84
0.09
1.70
1.34
1.09
A project needs an initial outlay of $3000 for equipment and will net a cash flow...
A project needs an initial outlay of $3000 for equipment and
will net a cash flow of $250 for the next 15 years. At the end of
the 15th year, there is a Salvage Value of $1000 for the equipment.
What is the NPV of the project if the cost of capital is 15% p.a.
effective (to the nearest dollar)?
Select one:
a. -$945
b. -$1415
c. $2250
d. $1585
A project needs an initial outlay of $3000 for equipment and will net a cash flow...
A project needs an initial outlay of $3000 for equipment and
will net a cash flow of $300 for the next 12 years. At the end of
the 12th year, there is a Salvage Value of $1000 for the equipment.
What is the NPV of the project if the cost of capital is 12% p.a.
effective (to the nearest dollar)?
An initial cash outlay of $1.4 million is made for a project. In Year 1, the...
An initial cash outlay of $1.4 million is made for a project. In
Year 1, the expected annual cash flow is $900,000. In Years 2–5 the
expected annual cash flow is $1,000,000, and in Year 6, the
expected annual cash flow is $1.3 million. A cost of capital of 15%
is used. The IRR (internal rate of return) is ???
Please show work/calculation using Texas Calculator. No
excel.
An investment project requires an initial outlay of $100,000, and is expected to generate annual cash...
An investment project requires an initial outlay of $100,000,
and is expected to generate annual cash inflows of $28,000 for the
next 5 years. The cost of capital is 12 percent. Determine the
internal rate of return for the project (to the nearest tenth of
one percent).
a.
12.0%
b.
12.6%
c.
3.6%
d.
12.4%
You are considering two mutually-exclusive projects: Project A and Project B. The initial cash outlay (cost)...
You are considering two mutually-exclusive projects: Project A
and Project B. The initial cash outlay (cost) associated with
Project A is $60,000, whereas the initial cash outlay associated
with Project B is $80,000. The required rate of return for both
projects is 10%. The expected annual free cash flows from each
project are as follows:
Year
Project A
Project B
0
- 60,000
-80,000
1
13,000
15,000
2
13,000
15,000
3
13,000
15,000
4
13,000
15,000
5
13,000
15,000
6...
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
A project has an initial outlay of $100,000. It has a single cash inflow at the...
A project has an initial outlay of $100,000. It has a single
cash inflow at the end of year 4 of $200,540. What is the internal
rate of return for the project (round to the nearest %)? a. 15% b.
17% c. 19% d. 21%
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