Question
Your company has five delivery trucks that are getting old and only have two years of useful life left in them. As they are not
Your company has five delivery trucks that are getting old and only have two years of useful life left in them. As they are not fuel efficient and need a lot of repairs, they generate net cash flow for the firm of only $25,000 per year. Five new trucks will cost $250,000, but they will generate net cash flow for the firm of $75,000 per year for five years. At the end of five years they will no longer be usable and will have no value. If the appropriate risk adjusted discount rate is 8% what is the net present value of the project?
Select one:
a. $4,872
b. ($8,948)
c. $9,489
d. $12,554
You are interested in getting into the retail sporting goods business. You know of a store that has Free Cash Flow to the Firm projected at $250,000 for next year. This cash flow amount is expected to grow by 2% at the end of year 2 and every year thereafter. The appropriate risk adjusted discount rate is 10% and there are one million shares outstanding. What is the value per share?
Select one:
a. $2.78
b. $5.75
c. $3.13
d. $2.09
just give answer no need for explanation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started