a company considering opening all store store will cost 100 million TL to build, and the present value of the expected cash flows from the store is 120 million TL. Further assume that by opening this store, the company will have the chance to expand into a much larger store any time over the next 5 years. The cost of expansion will be 200 million TL, and it will be undertaken only if the present value of the expected cash flows exceeds 200 million TL. At the moment, the present value of the expected cash flows from the expansion is believed to be only 150 million. The variance is 0.08, 5-year risk-free rate is 6%. What would be the strategic NPV? O 14.53 TL

a company considering opening all store store will cost 100 million TL to build, and the present value of the expected cash flows from the store is 120 million TL. Further assume that by opening this store, the company will have the chance to expand into a much larger store any time over the next 5 years. The cost of expansion will be 200 million TL, and it will be undertaken only if the present value of the expected cash flows exceeds 200 million TL. At the moment, the present value of the expected cash flows from the expansion is believed to be only 150 million. The variance is 0.08, 5-year risk-free rate is 6%. What would be the strategic NPV? O 14.53 TL

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

10- Assume that a company is considering opening a small store in İzmir. The
store will cost 100 million TL to build, and the present value of the expected cash
flows from the store is 120 million TL. Further assume that by opening this store,
the company will have the chance to expand into a much larger store any time
over the next 5 years. The cost of expansion will be 200 million TL, and it will be
undertaken only if the present value of the expected cash flows exceeds 200
million TL. At the moment, the present value of the expected cash flows from the
expansion is believed to be only 150 million. The variance is 0.08, 5-year risk-free
rate is 6%. What would be the strategic NPV?
O 14.53 TL
O 18.81 TL
20.61 TL
O 19.38 TL
Diğer:

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