Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Answer Q6, Q7 & Q8 - dont answer if you are not going to answer all please. Also show formulas used Q6. An investment project
Answer Q6, Q7 & Q8 - dont answer if you are not going to answer all please. Also show formulas used
Q6. An investment project has an initial cost of $382, and cash flows $105, $130, $150, and $150 for Years 1 to 4, respectively. The cost of capital is 9 percent. What is the discounted payback period? (4 marks] Q7. The Lo Sun Corporation offers a bond with a current market price of $1,029.75, a coupon rate of 8 percent, and a yield to maturity of 7.52 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? [4 marks] 08. The Mill Wheel is considering a project with a life of 3 years that will require $289,400 for fixed assets, $36,700 for inventory, and $27,800 for accounts receivable. The short-term debt for this project is $16,500. The fixed assets will be depreciated straight-line to a zero book value over 5 years. At the end of the project in Year 3, the fixed assets can be sold for 20 percent of their original cost. In this project, all relevant items for the net working capital will incur in Year 0 and return to zero at the end of the project in Year 3. The project is expected to generate annual sales of $275,000 and costs of $198,000. The tax rate is 21 percent and the required rate of return is 16 percent. What is the amount of the cash flow in the project's final year? [4 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started