Question

Carrefour is expecting its new center to generate the following cash flows:

Years |
0 |
1 |
2 |
3 |
4 |
5 |

Initial |
($35,000,000) |
|||||

Net operating cash-flow |
$6,000,000 |
$8,000,000 |
$16,000,000 |
$20,000,000 |
$30,000,000 |

a. Determine the payback for this new center. (1 mark)

b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted? (1 mark)

Answer:

**Q2.** What is the EAC of two projects: project A,
which costs $150 and is expected to last two years, and project B,
which costs $190 and is expected to last three years? The cost of
capital is 12%. (1 mark)

Answer:

**Q3**. A company pays annual dividends of $10.40
with no possibility of it changing in the next several years. If
the firm’s stock is currently selling at $80, what is the required
rate of return? (1 mark)

Answer:

**Q4**. Stag corp has a capital structure which is
based on 50% common stock, 20% preferred stock and 30% debt. The
cost of common stock is 14%, the cost of preferred stock is 8% and
the pre-tax cost of debt is 10%. The firm's tax rate is 40%. (1
mark)

- Calculate the WACC of the firm.
- The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $280,000 and annual cash inflows of $66,000, $320,000, and $133,000 over the next three years, respectively. What is the net present value of this project ?
- kindly answer alll the qoustion

Answer #1

Q1: Carrefour is expecting its new center to
generate the following cash flows:
Years
0
1
2
3
4
5
Initial
Investment
($35,000,000)
Net operating cash-flow
$6,000,000
$8,000,000
$16,000,000
$20,000,000
$30,000,000
a. Determine the payback for this new center. (1 mark)
b. Determine the net present value using a cost of capital of 15
percent. Should the project be accepted? (1 mark)
Q2. What is the EAC of two projects: project A,
which costs $150 and is expected to last...

Fin 101
Assignment
Questions
Q1: Carrefour is expecting its new center to
generate the following cash flows:
Years
0
1
2
3
4
5
Initial
Investment
($35,000,000)
Net operating cash-flow
$6,000,000
$8,000,000
$16,000,000
$20,000,000
$30,000,000
a. Determine the payback for this new center. (1 mark)
b. Determine the net present value using a cost of capital of 15
percent.Should the project be accepted? (1 mark)
Answer:
Q2.What is the EAC of two projects: project A,
which costs $150 and is...

A firm is planning a new project that is projected to yield
cash flows of - $595,000 in Year 1, $586,000 per year in Years 2
through 5, and $578,000 in Years 6 through 11. This investment will
cost the company $2,580,000 today (initial outlay). We assume that
the firm's cost of capital is 11%.
1. Compute the projects payback period, net present value
(NPV), profitability index (PI), internal rate of return (IRR), and
modified internal rate of return (MIRR)....

Q2. What is the EAC of two projects: project A,
which costs $150 and is expected to last two years, and project B,
which costs $190 and is expected to last three years? The cost of
capital is 12%. (1 mark)
Answer:
Q3. A company pays annual dividends of $10.40
with no possibility of it changing in the next several years. If
the firm’s stock is currently selling at $80, what is the required
rate of return? (1 mark)
Answer:n

1. A project has an initial outlay of $1,732. The project will
generate annual cash flows of $783 over the 4-year life of the
project and terminal cash flows of $258 in the last year of the
project. If the required rate of return on the project is 4%, what
is the net present value (NPV) of the project? Note: Enter your
answer rounded off to two decimal points. Do not enter $ or comma
in the answer box.
2.A...

CrochetCo is considering an investment in a project which would
require an initial outlay of $302774 and produce expected cash
flows in years 1 through 5 of $89756 per year. You have determined
that the current after-tax cost of the firm's capital (required
rate of return) for each source of financing is as follows:
Source of Capital
Cost
Weight
Long-Term Debt
4%
59%
Preferred Stock
10%
18%
Common Stock
14%
23%
What is the net present value of this project?

XYZ has a capital structure that is 35 % debt, 5 percent
preferred stock, and 65 %common stock. The pretax cost of debt is
8.25 %, the cost of preferred is 8%, and the cost of common stock
is 117%. The tax rate is 36%. The company is considering a project
that is equally as risky as the overall firm. This project has
initial costs of $550,000 and annual cash inflows of $130,000,
$400,000, and $550,000 over the next 3...

1. Project K costs $52,125 at time 0, its expected cash inflows
are $12,000 per year for 8 years, and its WACC is 12%. What is the
project's IRR? A. 15% B. 16% C. 17% D. 18%
2. Patton Corporation has a target capital structure of 60% debt
and 40% common equity, with no preferred stock. Its before-tax cost
of debt is 12%, and its tax rate is 40%. The stock price is $22.50.
The last dividend was $2.00, and...

Marshall Law firm expects to generate free-cash flows of
$200,000 per year for the next five years. Beyond that time, free
cash flows are expected to grow at a constant rate of 5 % per year
forever. If the firm's weighted average cost of capital is 15 %,
the market value of the firm's debt is $500,000, the market value
of its preferred stock is $200,000 and the firm has a half million
shares of common stock outstanding, what is...

Shannon industries is considering a project that has the
following cash flows:
Year Project cash flow
0 $-6,240
1 $1,980
2 $3,750
3 ?
4 $1,000
The project has a payback of 2.85 years.
The firm's cost of capital is 10 percent. what is the project's
net present value (NPV)?
a) 874.87
b) -146.92
c) 436.96
d) 727.95
e) -207.02

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