Practice questions

10 poMts eBook Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.4 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $4.7 million. The company wants to build its new manufacturing plant on this land; the plant will cost $11.9 million to build, and the site requires $710,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Enter your answer as a positive value in dollars, not millions of dollars. e.g., 1,234,567.) market risk premium is 10 percent. What must the beta of this stock be? (Do not round 2 A stock has an expected return of 12.2 percent. the risk-free rate is 6 percent. and the intermediate calculations and round your answer to 2 decimal places, 9.9., 32.16.) aetaofstock 10 points 10 points eBook @ Hint E! Print References A rm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 $28.300 1 12.300 2 15.300 3 11,300 What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 11 percent, should the rm accept this project? 0 No 0 Yes What is the NPV for the project if the required return is 25 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)