Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

do all 3 for an automatic thumbs up Year 1 2 3 5 Free Cash Flow $22 million $26 million $29 million $30 million $32

do all 3 for an automatic thumbs up
image text in transcribed
image text in transcribed
image text in transcribed
Year 1 2 3 5 Free Cash Flow $22 million $26 million $29 million $30 million $32 million General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 8% and General Industries has cash of $20 million, debt of $50 million, and 80 million shares outstanding, what is General Industries' expected current share price? A $15.78 B. $12.63 C. $11.05 D. $10.52 Consider a project with the following cash flows: Year Cash Flow 0 -8000 1 3200 2 3200 3 3200 3200 4 Assume the appropriate discount rate for this project is 15%. The profitability index for this project is closest to: OA. 0.16 B. 0.14 OC. 0.21 D. 0.57 The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $250,000. The Sisyphean Company expects cash inflows from this project as detailed below: Year 1 Year 2 Year 3 Year 4 $102,113 $102,113 $102,113 $102,113 The appropriate discount rate for this project is 16%. The internal rate of return (IRR) for this project is closest to: BE A. 26% B. 17% C. 23% D. 14%

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

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

12th Edition

978-0073526706, 9780073526706

More Books

Students also viewed these Accounting questions