Question(4): A power plant is being considered in the dead sea location. For an initial investment of $130 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the plant. a. What is the simple payback period for the plant?
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- Assuming monetary benefits of an information system at $85,000 per year, one-time costs of $75,000, recurring costs of $35,000 per year, a discount rate of 12 percent, and a 5-year time horizon, calculate the net present value (NPV) of the system’s costs and benefits. Also calculate the overall return on investment (ROI) of the project and then present a break-even analysis (BEA). At what point does break-even occur?Given the following cash flows for project X and project Y, Year Project X Project Y 0 -55000 -100000 1 20000 15000 2 13500 17000 3 11000 19000 4 10000 25000 5 9000 30000 6 7500 35000 Calculate the NPV, IRR, MIRR and traditional payback period for each project, assuming a required rate of return of 7 percent If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 26% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 21% per year. Required: a. What is your estimate of the intrinsic value of a share of the stock? Note: Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places. b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 2 decimal places. c. What do you expect its price to be one year from now? Note: Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places. d-1. What is the implied capital gain? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places. d-2. Is the implied capital gain…
- Phil’s Flowers (PF) currently has 5,600,000 shares of stock outstanding that sell for $117 per share. Assuming no market imperfections or tax effects exist, what will be the total number of shares and the share price after each of the following? (Please consider each one independently). c) PF has a $2.50 cash dividend? (Step by step solutions )A stock now trades for 11 TL per share and distributes 0.16 TL in dividends annually. What is the stock worth to an investor if she anticipates selling it for 14 TL in a year and demands a 10% return on equity investments? a. 12,89%b. 12,73%c. 12,87%d. 10%Use a calculator for this exercise.Suppose you obtain a five-year lease for a Porsche and negotiate a selling price of $143,000. The annual interest rate is 8.4%, the residual value is $76,000, and you make a down payment of $7000. Find each of the following. (a) The net capitalized cost$ (b) The money factor (rounded to four decimal places)(c) The average monthly finance charge (rounded to the nearest cent)$ (d) The average monthly depreciation (rounded to the nearest cent)$ (e) The monthly lease payment (rounded to the nearest cent)$
- link co just paid a dividend of $1.00 per share. Analysts expect its dividend to grow at 20% per year for the next two years and then 3% per year thereafter. If the required rate of return in the stock is 7%, calculate the current value of the stock. $32.49 $34.77 $35.82 $36.00 $37.20Part 1Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutuallyexclusive projects. The required rate of return is 15% and the target payback is 4 years.Explain which project is preferable under each of the four capital budgeting methodsmentioned above: Cash flows for two mutually exclusive projects Year Investment A Investment B 0 -$5,000,000 -5,000,000 1 $1,500,000 $1,250,000 2 $1,500,000 $1,250,000 3 $1,500,000 $1,250,000 4 $1,500,000 $1,250,000 5 $1,500,000 $1,250,000 6 $1,500,000 $1,250,000 7 $2,000,000 $1,250,000 8 0 $1,600,000 Part 2 Please study the following capital budgeting project and then provide explanations for thequestions outlined below:You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ),manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.1 million in…Use the following cash flows to find the NPW, IRR, PI, and PBPYou are looking at a new project and you have estimated the followingcash flows:◦ Year 0: CF = -165,000◦ Year 1: CF = 63,120;◦ Year 2: CF = 70,800;◦ Year 3: CF = 91,080;Your required return for assets of this risk is 12%
- What process does the net present value method use to help management determine whether a project is acceptable to a company? Options : A. It discounts net cash flows to their present value and then compares that value to the capital outlay required by the project.B. It determines the interest rate that will cause the present value of the capital expenditure to equal the present value of the expected net cash flows.C. It divides the present value of net cash flows by the initial investment to determine the profitability index of the project.D. It identifies the time period required to recover the cost of the capital investment from the net annual cash flow produced by the project.Present worth is an equivalence method of analysis in which a project's cash flows are discounted to a single present value. True or false?2.5. An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each end will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12 per cent, which pole should be used. Assume annual taxes amount to 1 per cent of first cost and zero salvage value in both cases