A company considers investing in a $200million in a toll-road project wich they will manage for 30 years (this is called a concession). The road generates income of 10million per year but requires maintenance in years 10, 20 and 30 which costs $2million. Their MARR is 14%. Is this a feasible project?

A company considers investing in a $200million in a toll-road project wich they will manage for 30 years (this is called a concession). The road generates income of 10million per year but requires maintenance in years 10, 20 and 30 which costs $2million. Their MARR is 14%. Is this a feasible project?

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

See similar textbooks

Similar questions

Question: Big Steve's, maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 and will generate net cash inflows of $19,000 per year for 8 years. a. What is the project's NPV using a discount rate of 8 percent? Should the project be accepted? Why or why not? b. What is the project's NPV using a discount rate of 17 percent? Should the project be accepted? Why or why not? c. What is this project's internal rate of return? Should the project be accepted? Why or why not?
Please answer D and E only, thanks.
(Ignore income taxes in this problem.) Your Company is considering a project with a 6-year life. Your required rate of return is 14%. What is the net present value of the project? Project Cost of equipment needed now $50,000 Working capital investment needed now 65,000 Annual cash operating inflows 25,000 Salvage value of equipment in 6 years $11,865 O ($7,755. O $47,225 $13,350.
Answer the questions ASAP.
11. I need help with finance home work question A company is considering a 7-year project. At the beginning of the project, a cash outflow in the amount of $340,000 would be required. The company expects the project would generate cash inflows in the amount of $70,000 at the end of each of the project's 7 years. Assume the company requires a return of 8%. What NPV does the company expect for this project?
1) Rainbow Corp. is considering an investment whereby it will invest $100 in a perpetuity that will pay the firm $30 annually forever, starting one year from now. If the firm has a payaback period of 3 years, will it do the project? a) Yes b) No 2) If Rainbow has a cost of capital of 10%, will it invest in the project when doing an NPV analysis? a) Yes b) No
A L0IN33 builder company is deciding to undertake a pr0ject. The pr0ject is quite profitable as it will generate net cash inflows of $20 million per year for 5 years. However, it will cause pollution to the nearby residents. The company can mitigate this pollution by investing additional 10 million at Year 0 but legally it is n0t compulsory for it to do so. Undertaking this project would cost $60 million without mitigation. If the firm does invest in mitigati0n, the annual cash inflows would be $22 million. The risk adjusted WACC is 12%. Calculate the NPV and IRR with and without mitigation(IRR must) Should the project be undertaken? If so, should the firm do mitigation
18. Occidental Oman is thinking about a project where the initial investment is RO 12000 and the total life of the project is 5 years. The project is expected to generate RO 3800 every year during the entire life of project. If the management keeps a standard of 3 year as pay back then in this case the decision will be __________. a. The project is not worth as cash flow is not significant b. None of the options c. The project will be rejected because the payback period is more d. The project will be accepted because the payback period is less
Intro You are evaluating an investment project costing $49,000 initially. The project will provide $3,000 in after-tax cash flows in the first year, $4,000 in the second year and $7,000 each year thereafter for 10 years. The maximum payback period for your company is 9 years. Part 1 What is the payback period for this project? 0+ decimals Submit Part 2 Should your company accept this project? Yes No Submit
27² Riai Airlines is considering two alternative Planes. Plane A has an expected life of Sures Years, has an after-tax cost of $80 millian, and will produce after-tax cash flows ofst 21 $40 million per year. Plane B has a life of 10 years, has an after-tax cast of $119 million, and will produce after-tax cash flows of 121 $35 million per year. Rim plans to serve the uni route for 10 years. The company's WACC is 8%. If Rini needs to purchase a new Plane A, the after-tux cost will be $90 million, but cash inflows will remain the Should Rini all acquire Plan A or Plane B? Explain your answer, Enter your answers in millions. For example, same. on answer $10, 550,000 should be entered as lo.ss. Do not round intermediate calculations. Round your criswer to two decimal places. 2004200 Plane is the better project and will increase $ - $ the company's value by 5 millions. millions f ex boll 19 E TOUS
Question(3): A power plant is being considered in the dead sea location. For an initial investment of $170 million, annual net revenues are estimated to be $15 million in years 1–5 and $20 million in years 6–20. Assume no residual market value for the plant. a. What is the simple payback period for the plant? b. What is the discounted payback period when the MARR is 4% c. Using an equivalency technique (FW, PW, or AW), MARR is 4P% per year, would you recommend investing in this project? per year?
A L0IN33 builder company is deciding to undertake a pr0ject. The project is quite profitable as it will generate net cash inflows of $20 million per year for 5 years. However, it will cause pollution to the nearby residents. The company can mitigate this pollution by investing additional 10 million at Year 0 but legally it is n0t compulsory for it to do so. Undertaking this project would cost $60 million without mitigation. If the firm does invest in mitigation, the annual cash inflows would be $22 million. The risk adjusted WACC is 12%. Calculate the NPV and IRR with and without mitigation Should the project be undertaken? If so, should the firm do mitigation Note please tell me how to find pv factor@19% and 20%/discounting 19% and 20%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS