Question
(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)
- Calculate the WACC of the firm.
- 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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