Business

FinanceQ&A LibraryCapital budgeting problems and what king of you used for solving (NPV and IRR PROBLEMS ) A firm has the following investment alternative. Each one lasts a year Investment A B C Cach inflow $1,150 $560 $600 Cash outflow $1000 $500 $500 The firm's cost capital 7 percent. A and B are mutually exclusive, and B and C are mutually exclusive. a. What is the net value of investment A? Investment B? investment C? B. W hat is the internal rate on investment A? investment B? INvestment C? c. Which invedstment(s) should the firm make? Why? d. If the firm had unlimited sources of funds, which investments should it make? Why? e. If there another alternative, investment D, with an internal rate of return of 6 percent, would that alter your anser to question (d)? why? f. If the firm's cost of capital rose to 10 percent, what effect would that have on investment A's internal rate return?Question

Capital budgeting problems and what king of you used for solving (NPV and IRR PROBLEMS )

A firm has the following investment alternative. Each one lasts a year

Investment A B C

Cach inflow $1,150 $560 $600

Cash outflow $1000 $500 $500

The firm's cost capital 7 percent. A and B are mutually exclusive, and B and C are mutually exclusive.

a. What is the net value of investment A? Investment B? investment C?

B. W hat is the internal rate on investment A? investment B? INvestment C?

c. Which invedstment(s) should the firm make? Why?

d. If the firm had unlimited sources of funds, which investments should it make? Why?

e. If there another alternative, investment D, with an internal rate of return of 6 percent, would that alter your anser to question (d)? why?

f. If the firm's cost of capital rose to 10 percent, what effect would that have on investment A's internal rate return?

Find answers to questions asked by student like you

Q: You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning 10 yea...

A: PV today, of a perpetuity starting a year from now is given by = P / r where P = perptuity amount an...

Q: The yield on a default-free four-year zero-coupon bond is 3%; the yield on a default-free five-year ...

A: The spot rate for the year N, given by SN is same as the yield of a zero coupon bond with maturity o...

Q: The common stock of Company XLT and its derivative securities currently trade in the market at the f...

A: Part (a)Let's denote current stock price as S0, call premium as C, put premium as P, strike price as...

Q: in the firm's most recent financial statements, newhouse, inc. reported 57 mil usd of ni and 808 mil...

A: Let's say, RE represents retained earning, NI represents net income and D represents dividends decla...

Q: A Company project of 10 years, Paying 2,000,000 a year with a 4% growth each year, at the end it wil...

A: Calculation of Present Value:To calculate the present value, first we need to calculate the present ...

Q: Suppose that Sudbury Mechanical Drifters is proposing to invest $10.8 million in a new factory. It c...

A: Part (a)Annual depreciation rate under straight line method = 1 / useful life = 1/10 = 10%Hence, ann...

Q: Simone's Sweets is an all-equity firm that has 9,100 shares of stock outstanding at a market price o...

A: Calculating the earnings per share (EPS) of levered firm and unlevered firm. We have,Number of stock...

Q: I asked this question yesterday: Suppose that, in each period, the cost of a security either goes up...

A: At the outset, we regret the approach that was provided to you in the earlier solution. We also stat...

Q: suppose the rate of $1 for yen is 83 yen, what is 2,5000,000 in dollar

A: Given amount = A = 25,000,000 YenExchange rate (Yen / $) = 83 ie. 83 Yen = 1 $We have to express A i...