Question

Panelli's is analyzing a project with an initial cost of $110,000 and cash inflows of $65,000...

Panelli's is analyzing a project with an initial cost of $110,000 and cash inflows of $65,000 in year 1 and $74,000 in year 2. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt and common stock to finance its operations and maintains a debt-equity ratio of .45. The aftertax cost of debt is 4.8 percent, the cost of equity is 12.7 percent, and the tax rate is 35 percent. What is the projected net present value of this project?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Antonio's is analyzing a project with an initial cost of $31,000 and cash inflows of $27,000...
Antonio's is analyzing a project with an initial cost of $31,000 and cash inflows of $27,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt and common stock to finance their operations and maintains a debt-equity ratio of 0.5. The pre-tax cost of debt is 9.6 percent and the cost of equity is 12.3 percent. The tax rate is...
cromwell's Interiors is considering a project that is equally as risky as the firm's current operations....
cromwell's Interiors is considering a project that is equally as risky as the firm's current operations. The Firm has a cost of equity of 15.4% and a pre-tax cost of debt of 8.9%. The debt equity ratio is .46 what's the tax rate is 21%. They are evaluating a project that will cost $60,000 and will cash inflows of $20,000, $30,000, $40,000, respectively for the three years of the project what is the net present value for this project?
Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $4.3...
Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $4.3 million at the end of the first year, and these savings will grow at a rate of 1.9 percent per year indefinitely. The firm has a target debt-equity ratio of .40, a cost of equity of 10.8 percent, and an aftertax cost of debt of 3.2 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.89...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.89 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt–equity ratio of .8, a cost of equity of 12.9 percent, and an aftertax cost of debt of 5.7 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective...
A levered firm has a target capital structure of 30 percent debt and 70 percent equity....
A levered firm has a target capital structure of 30 percent debt and 70 percent equity. The aftertax cost of debt is 5.1 percent, the tax rate is 35 percent, and the cost of equity is 13.1 percent. The firm is considering a project that is equally as risky as the overall firm. The project has an initial cash outflow of $1.2 million and annual cash inflows of $516,000 at the end of each year for 3 years. What is...
Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $6...
Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $6 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt-equity ratio of .59, a cost of equity of 13.4 percent, and an aftertax cost of debt of 5.3 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.79...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.79 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The company has a target debt–equity ratio of .85, a cost of equity of 11.9 percent, and an aftertax cost of debt of 4.7 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.72...
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.72 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The company has a target debt–equity ratio of .8, a cost of equity of 11.2 percent, and an aftertax cost of debt of 4 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective...
Alpha Industries is considering a project with an initial cost of $9.7 million. The project will...
Alpha Industries is considering a project with an initial cost of $9.7 million. The project will produce cash inflows of $1.67 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.12 percent and a cost of equity of 11.61 percent. The debt–equity ratio is .77 and the tax rate is 40 percent. What is the net present value of the project?
Alpha Industries is considering a project with an initial cost of $9.1 million. The project will...
Alpha Industries is considering a project with an initial cost of $9.1 million. The project will produce cash inflows of $2.13 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.15 percent and a cost of equity of 11.63 percent. The debt–equity ratio is .78 and the tax rate is 35 percent. What is the net present value of the project?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT