A project that costs $3,200 to install will provide annual cash flows of $670 for the next 6 years. The firm accepts projects with payback periods of less than 4 years. a. What is this project's payback period? (Round your answer to 3 decimal places.) b. Will the project be accepted? c-1. What is project NPV if the discount rate is 3%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) c-2. Should this project be pursued? d-1. What is project NPV if the discount rate is 9%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) d-2. Should this project be pursued? e. Will the firm’s decision change as the discount rate changes?
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
A project that costs $3,200 to install will provide annual cash flows of $670 for the next 6 years. The firm accepts projects with payback periods of less than 4 years.
a. What is this project's payback period? (Round your answer to 3 decimal places.)
b. Will the project be accepted?
c-1. What is project
c-2. Should this project be pursued?
d-1. What is project NPV if the discount rate is 9%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)
d-2. Should this project be pursued?
e. Will the firm’s decision change as the discount rate changes?
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