Question

Suppose you have developed the following information for a potential investment: current market value is $1,100,000;...

Suppose you have developed the following information for a potential investment: current market value is $1,100,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 11.5%. a. What is the internal rate of return on this potential investment? b. What is the profitability index on this investment?

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
Suppose you have developed the following information for a potential investment: current market value is $1,200,000;...
Suppose you have developed the following information for a potential investment: current market value is $1,200,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 12%. a. What is the internal rate of return on this potential investment? b. What is the profitability index on...
Suppose you have developed the following information for a potential investment: current market value is $1,250,000;...
Suppose you have developed the following information for a potential investment: current market value is $1,250,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 12%. a. What is the internal rate of return on this potential investment? b. What is the profitability index on...
Suppose you have developed the following information for a potential investment: current market value is $1,250,000;...
Suppose you have developed the following information for a potential investment: current market value is $1,250,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 12%. a. What is the internal rate of return on this potential investment? b. What is the profitability index on...
11. The discount rate that makes the net present value of an investment exactly equal to...
11. The discount rate that makes the net present value of an investment exactly equal to zero is the: A) Payback period. B) Internal rate of return. C) Average accounting return. D) Profitability index. E) Discounted payback period. 12. The internal rate of return (IRR) rule can be best stated as: A) An investment is acceptable if its IRR is exactly equal to its net present value (NPV). B) An investment is acceptable if its IRR is exactly equal to...
You have just completed an analysis of an investment. You used Net Present Value, Profitability Index...
You have just completed an analysis of an investment. You used Net Present Value, Profitability Index and Internal Rate of Return. Your boss has just asked you for the payback. What will you tell him/her?
Question 4 (Total marks =15) You are evaluating an investment project, Project XX, with the following...
Question 4 (Total marks =15) You are evaluating an investment project, Project XX, with the following cash flows: Period Cash Flow 0 -$200,000 1 $65,000 2 $65,000 3 $65,000 4 $65,000 5 -$65,000 Calculate the following: (a). Payback period ( 2 marks) (b). Calculate the discounted cash flows for each year, assuming a 10% discount rate. (c) Discounted payback period, assuming a 10% cost of capital. (d) .Net present value, assuming a 10% cost of capital. (e). Profitability index, assuming...
You are considering an investment into an income producing property (let’s call it Property A). The...
You are considering an investment into an income producing property (let’s call it Property A). The acquisition price is $227,500 and you can finance it with a 70% loan to value ratio mortgage with a 6% annual interest rate. This will be a fixed-rate mortgage with constant monthly The broker provides you with the following (incomplete) information about Property A. You determine that you will make this investment if it yields an after-tax internal rate of return on equity which...
Instructions: The assignment is based on the mini case below. The instructions relating to the assignment...
Instructions: The assignment is based on the mini case below. The instructions relating to the assignment are at the end of the case. The Case Mike Chang and Joan Brown are facing an important decision. After having discussed different financial scenarios into the wee hours of the morning, the two computer engineers felt it was time to finalize their cash flow projections and move to the next stage – decide which of two possible projects they should undertake. Both had...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT