Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can you answer all the parts please!! You are evalualing a project that requires an investrent of $103 today and garantees a single cash fow

can you answer all the parts please!! image text in transcribed
You are evalualing a project that requires an investrent of $103 today and garantees a single cash fow of $120 one year from now You decide to use 100 is debt thaveing, that is, you wil berrow \$103. The risk-tree rale is 5% and the tax rate is 33%. Asture that the investment is fuly depreciated at the end of the year, so without leverape you would owe taves on the diference between the . project cash flow and the irvestrment, that is, $17. a. Calcylate the NPV of this investment oppontunity using the APV method. b. Using your answer to part (a), calculate the WACC of the propect. c. Verify that you get the same arswer using the WACC mwthod to calcilate NPV. d. Finaly, show that fow-to-equaly method also correcty gives the NPV of this investmert epportunty. a. Cakculate the NPV of this imestrent epportunity using the APV methed The NPV of this incestrem opportunty is 1 (Round to tho desimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Create Wealth Over The Long Run Give Yourself The Life You Deserve

Authors: Micheal J. Bess

1st Edition

979-8865993711

More Books

Students also viewed these Finance questions