Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please solve with excel. Thanks! Suppose a project generates revenues averaging $750,000 per year perpetually. Variable costs are always proportional to revenues, equal to 30%

image text in transcribedplease solve with excel. Thanks!

Suppose a project generates revenues averaging $750,000 per year perpetually. Variable costs are always proportional to revenues, equal to 30% of revenue. There are no other operating costs. The cost of capital is 13%. Your firm's long-term borrowing rate is 7%. A company proposes a fixed-price contract to cover costs at $200,000 per year for 10 years. Find the PV of the project with and without the fixed cost contract (with contract; without contract). A $3,679,060 ; $3,854,650) B ($3,854,650 ; $4,038,462) ($3,538,589; $3,679,060) D ($4,038,462 ; $5,259,366) E ($5,259,366; $4,230,769) Suppose a project generates revenues averaging $750,000 per year perpetually. Variable costs are always proportional to revenues, equal to 30% of revenue. There are no other operating costs. The cost of capital is 13%. Your firm's long-term borrowing rate is 7%. A company proposes a fixed-price contract to cover costs at $200,000 per year for 10 years. Find the PV of the project with and without the fixed cost contract (with contract; without contract). A $3,679,060 ; $3,854,650) B ($3,854,650 ; $4,038,462) ($3,538,589; $3,679,060) D ($4,038,462 ; $5,259,366) E ($5,259,366; $4,230,769)

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

The Ultra High Net Worth Bankers Handbook

Authors: Heinrich Weber, Stephan Meier

1st Edition

1905641753, 978-1905641758

More Books

Students also viewed these Finance questions

Question

7. Identify six intercultural communication dialectics.

Answered: 1 week ago