A project costs $100,000. It's expected cashflow is $10,000 per year for 12 years

Question # 00108012 Posted By: kimwood Updated on: 09/25/2015 10:05 PM Due on: 10/25/2015
Subject Economics Topic General Economics Tutorials:
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Q1.

A project costs $100,000. It's expected cashflow is $10,000 per year for 12 years. and its WACC is 14%.

1.What's the project NPV, IRR?, MIRR? Payback and Discounted Payback?

2. Then, answer the following question in the DB window: !!!What's the difference between NPV, IRR and MIRR?!!!!

Q2.

Overslept Pharmaceuticals has a capital structure of 45% debt and 55% Equity, with no preferred stock. The yield to maturity on the company's outstanding bond is 10.8%. and its tax rate is 35%. Overslept's CFO estimates the company's WACC at 12%,

1. What is Overslept's cost of common equity?

2. Then, please answer the following question in the Discussion Board window: !!!What are the different capital components of WACC?!!!

Q3.

Lucky Inc. has a target capital structure of 53% common equity and 47% debt to fund its 5 billion in operating assets. Its WACC is 12%. Its before tax cost of debt is 9.89%. Its tax rate is 35%. Retained earnings are adequate to provide the common equity portion of its capital budget. Expected dividend next year D1 is $1.75 and the current stock price is $20.

1.What is the expected growth rate of the company?

2.If the firm's net income is expected to be 600 million, what portion of that net income is the company expected to pay out as dividends?

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  1. Tutorial # 00102437 Posted By: kimwood Posted on: 09/25/2015 10:05 PM
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