Wal-Mart new store near campus is expected to generate cash profits as follows. Year 0: -10 millions (initial outlay) Year 1: 1 million Year 2: 2 million Year 3: 3 million Year 4: 3 million Year 5: 3 million Year 6: 3 million Year 7: 3 million Year 8: 3 million The store will be closed by the end of the fifth year with no salvage value. Assume the cost of capital (WACC) is 6%. Based on the above information, how much is NPV? 11 millions 52 millions 61 millions 85 millions
Wal-Mart new store near campus is expected to generate cash profits as follows.
Year 0: -10 millions (initial outlay)
Year 1: 1 million
Year 2: 2 million
Year 3: 3 million
Year 4: 3 million
Year 5: 3 million
Year 6: 3 million
Year 7: 3 million
Year 8: 3 million
The store will be closed by the end of the fifth year with no salvage value.
Assume the cost of capital (WACC) is 6%.
Based on the above information, how much is NPV?
- 11 millions
- 52 millions
- 61 millions
- 85 millions
A zero coupon bond has no value in it since there is no coupon payment. Investors should avoid this type of bond. .
- True
- False
A zero coupon bond has 18 years left to maturity. Its market price is $300. What is the yield to maturity of this zero coupon bond? (Hint: Zero coupon bond should be treated as semi-annual coupon bond)
- 7.2%
- 6.8%
- 5.4%
- 4.9%
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