Question
Can the following problem be done in excel with equations You are considering opening a new plant. The plant will cost $96.4 million up front.
Can the following problem be done in excel with equations
You are considering opening a new plant. The plant will cost $96.4 million up front. It is expected to produce profits of $28.7 million at the end of every year, starting year 1. The cash flows are expected to last forever. There are 2 million shares outstanding.
a. Calculate the NPV of this investment opportunity if your cost of capital is 8.9%. Should you make the investment?
b. Current stock price is $50. What is the impact of this project on the stock price?
c. Draw the NPV vs r graph of this project. Calculate the IRR and locate it on the graph.
d. Based on the graph in c, discuss whether you would accept or reject a project if your companys cost of capital was between 3% and 5%. Please justify your answer.
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