QUESTION 2. management whether it should be accepted 21%. Evaluate the following investment project according to the internal rate of return and advise the rejected. The weighted average cost of capital (WACC) of the firm is Year Cash Outflows Year Cash Inflows 250.000,00 1 100.000,00 2 150.000,00 3 1.250.000

QUESTION 2. management whether it should be accepted 21%. Evaluate the following investment project according to the internal rate of return and advise the rejected. The weighted average cost of capital (WACC) of the firm is Year Cash Outflows Year Cash Inflows 250.000,00 1 100.000,00 2 150.000,00 3 1.250.000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1CMA

See similar textbooks

Similar questions

QUESTION 2. management whether it should be accepted or rejected. The weighted average cost of capital (WACC) of the firm is Evaluate the following investment project according to the internal rate of return and advise the 21%. Year Cash Outflows Year Cash Inflows 250.000,00 1 1 100.000,00 2 150.000,00 3 1.250.000
1. Define and identify the components of:a. Operating cycleb. Cash conversion cycle2. What is the impact of longer cash conversion cycles on a firm’s working capital needs?3. Explain the profitability-risk trade-off of alternative levels of working capital balances.4. Explain the profitability-risk trade-off of alternative methods of financing a given working capital investment.5. Why does the typical firm need to make investments in working capital?6. Discuss the profitability versus risk trade-offs associated with alternative levels of working capital investment.7. A. which of the following working capital financing policies subjects the firm to a greater risk?i. Financing permanent current assets with short-term debtii. Financing fluctuating current assets with long-term debt B. Which policy will produce the higher expected profitability?
please colud you explain me what how you using calculator or computation to determine NPV or IRR. A firm has the following investment alternatives: Year A B C 1 $400 $--- $-- 2 400 400 --- 3 400 800 --- 4 400 800 1,800 Each investment costs $1,400, and the firm's cost of capital is 10 percent. a. What is each investment's internal rate of return? b. Should the firm make any of these investment? c. What is each investment's net present value? d. Should the firm firm make any of these investments?
BIE The Cost of Capital: Weighted Averige cost of capital The firm's target capital structure is the mix of debt, presured stack, and common equity the firm plans to mise funds for future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these I components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common study then the cost of retained earnings is used in the firm's WACC calculation. However, if the firm will I have to issue new common stock, the cost of new common stock should be used in the firm's WALC calculation. Barton Industines expects that its target capital Structure for finds in the future for its raising capital budget will consist of 40% debt, 5% prefence stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd is 10.0%, the firm's cost of preferred stock, rp is 9.2.%. and the firm's cost of…
The duration of time within which the investment made for the project will be recovered by the net returns of the project is known as а. Accounting rate of return method b. Payback period С. Net present value method d. Period of return Capital budgeting is the process of evaluating and selecting short-term investments that are consistent with the firm's goal of maximizing owners' wealth. Select one: True False
A firm has two possible investment with the following cash inflows. Each investment cost $480, and the cost of capital is ten percent. Cash Inflows Year A B 1 $300 $200 2 200 200 3 100 200 a. Based only on visual inspection, which investment is to be preferred and why? b. Based on each investment’s net present value, which investment(s) should the firm make? c. Based on each investment’s internal rate of return, which investment(s) should the firm make? Is this the same answer you obtained in part b? d. If the cost of capital were to increase to 14 percent, which investment(s) should the firm make?
pls on ur own .Balentine company has been presented with an investment opportunity that will yield the following cash flow as given below. the company appropriate wacc is 4%. years 0 1 2 3 cash flow -1000, 500 ,900 ,100 the internal rate of return for this investment opportunity is closest to?
Suppose the HomeNet's Cost of Capital is12%, use NPV, IRR, MIRR, PI, PP and DPPinvestment appraisal methods to analyse thisforecasted FCFs. Interpret your investment decisions madeaccording to the rules mentioned
Marginal analysis and capital budgeting decisions. A company faces the following schedule of potential investment projects (all assumed to be equal risk). Use marginal analysis to decide which projects should NOT be undertaken? Expected Rate of Return (%) Project alm|0|n|u|u A B с D E F CH G 1 Investment Required ($ million) 25 15 40 35 12 20 18 13 7 OF and G OH and I OF, G, H, and I 01 OG, H, I 27 24 21 18 15 14 13 11 8 Cumulative Investment The following is the cost of acquiring the funds needed to finance these investment projects. Cost of Capital (%) Block of funds ($ million) First 50 10 Next 25 10.5 11 Next 40 Next 50 12.2 Next 20 14.5 25 40 80 115 127 147 165 178 185 50 75 115 165 185 Cumulative Funds Raised
URGENT PLEASE d. Calculate the firm's weighted average cost of capital using the capital structure weights shown in the following table . (Round answer to the nearest 0.01%)
Q.1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues - expenses) for each alternatives are presented in the following table. Based on NPV analysis, if the company’s minimum acceptable rate of return is 10%, which alternative should be the best economic choice? Use appropriate IRR analysis to double-check your selection. Investment, M$ A B C Initial cost -$200 -$350 -$500 Net Revenues, year 1 to 3 $80 $105 $85 Net Revenues, year 4 $60 $90 $150 Net Revenues, year 5 $40 $80 $250
Company Valuation with WACC (VO) (40 points) 1. You are evaluating a project for a local private equity fund, and they have provided the data below. The value of a firm can be calculated as the sum of a series of cash flows over time, as shown in the following formula. V 0 Where: = CFA₁ (1 + WACC)¹ + CFA, (1 + WACC)² + CFA (1 + WACC)³ +...+ CFA +V (1 + WACC)² CFA V = t+1 WACC -9++1 CFA is "free cash flow" or FCF. And: WACC 15.67% FCF (mn $) $134 g1 4.13% g2 5.69% 2.65% g3 (and beyond) a) What is the value of the company under analysis? Provide the result of $000 (mn).