Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information is provided year 1 2 3 4 Cash flow Ksh 000 Ksh 000 Ksh 000 Ksh 000 2000 3000 6000 7000 Additional

image text in transcribed

The following information is provided year 1 2 3 4 Cash flow "Ksh 000" "Ksh 000" "Ksh 000" "Ksh 000 2000 3000 6000 7000 Additional information Investment will cost 5000,000 including 100,000 for daily operations and 50,000 for other preliminary costs. Investment will be financed 25% equity and 75% debt. The expected company gearing after investment will change to30% equity and 70% debt Investment equity beta 0.7 Cost of debt was 10% Capital allowances are 30% per year on declining balance basis Corporate tax was 25%, risk free rate was 6% and a market return of 13% After tax value of investment at the end of 5 years was 2.5 million Using the above information compute the NPV, APV and MIRR for this investment. The following information is provided year 1 2 3 4 Cash flow "Ksh 000" "Ksh 000" "Ksh 000" "Ksh 000 2000 3000 6000 7000 Additional information Investment will cost 5000,000 including 100,000 for daily operations and 50,000 for other preliminary costs. Investment will be financed 25% equity and 75% debt. The expected company gearing after investment will change to30% equity and 70% debt Investment equity beta 0.7 Cost of debt was 10% Capital allowances are 30% per year on declining balance basis Corporate tax was 25%, risk free rate was 6% and a market return of 13% After tax value of investment at the end of 5 years was 2.5 million Using the above information compute the NPV, APV and MIRR for this investment

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

Financial Markets And Institutions

Authors: Frederic S. Mishkin, Stanley G. Eakins

7th Edition

013213683X, 978-0132136839

More Books

Students also viewed these Finance questions