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(Subject if Finance, Please answer using keyboard and sure I will like you answer with thumps up, Stay safe and Thank you in advance). Q1:

(Subject if Finance, Please answer using keyboard and sure I will like you answer with thumps up, Stay safe and Thank you in advance).

Q1: Carrefour is expecting its new center to generate the following cash flows:

Years

0

1

2

3

4

5

Initial Investment

($35,000,000)

Net operating cash-flow

$6,000,000

$8,000,000

$16,000,000

$20,000,000

$30,000,000

a. Determine the payback for this new center. (1 mark)

b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted? (1 mark)

Q2. What is the EAC of two projects: project A, which costs $150 and is expected to last two years, and project B, which costs $190 and is expected to last three years? The cost of capital is 12%. (1 mark)

Q3. A company pays annual dividends of $10.40 with no possibility of it changing in the next several years. If the firms stock is currently selling at $80, what is the required rate of return? (1 mark)

Q4. Stag corp has a capital structure which is based on 50% common stock, 20% preferred stock and 30% debt. The cost of common stock is 14%, the cost of preferred stock is 8% and the pre-tax cost of debt is 10%. The firm's tax rate is 40%. (1 mark)

  1. Calculate the WACC of the firm.
  2. The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $280,000 and annual cash inflows of $66,000, $320,000, and $133,000 over the next three years, respectively. What is the net present value of this project ?

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