Alpha Industries is considering a project with an initial cost of $8.4 million. The project will produce cash inflows of $1.56 million per year for 8 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.49 percent and a cost of equity of 11.19 percent. The debt - equity ratio is .56 and the tax rate is 23 percent. What is the net present value of the project?

Q: NPV and IRR   Benson Designs has prepared the following estimates for a​ long-term project it is…

A: GIVEN, initial investment = $9670 years = 5 after tax cashflow = $3000 r= 8%

Q: Alpha Inc. has a target debt-to-value ratio of .6. The pretax cost of debt is 10 percent, the tax…

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A: The discounted cash flow valuation method is a frequently employed method wherein all the future…

Q: NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is…

A: If NPV of project is positive, Project must be accepted.If NPV of project is negative, Project must…

Q: A firm is considering an investment opportunity. The firm’s cost of capital for this project is 14%.…

A: Cost of capital = r = 14% Initial Investment = $10 million Cash flow in year 1 = cf1 = $868,000 Cash…

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A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

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A: NPV means net present value.It is a capital budgeting technique used for making investment…

Q: Let's say you have a 10 year project with annual after tax cashflows of $15.  Assume after tax…

A: Present Value refers to the value of cash flows today which is to be received at some future time…

Q: ireRock Wheel Corp is evaluating a project in which there is a 40 per cent probability of revenues…

A: Expected revenue = (0.40 * $ 3 million) + (0.60 * $ 1 million) = 1.2 million + 0.6 million = 1.8…

Q: A firm is considering a project that will generate perpetual after-tax cash has the same risk as the…

A: Capital budgeting is a process of allocating the company's capital into profit-generating projects…

Q: (a) What is the internal rate of return of this investment? (b) The hurdle rate is 13.5%. Should the…

A: Internal Rate of Return (IRR) is the rate at which present value of cash inflows is equal to the…

Q: A project costs $334 at t = 0 and generates unlevered after - tax cash flows of $51 per year…

A: We are given the following information about the project :Project cost$334.00After-tax cash…

Q: Alpha Industries is considering a project with an initial cost of $8.4 million. The project will…

A: Net present value is a capital budgeting technique used for making investment decisions.Net present…

Q: Building Better Co. is considering branching out into a new product line. They forecast annual cash…

A: given information annual cash flows = 340,000 initial investment = $1,200,000. cost of capital =…

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A:

Q: A project has expected cash flows with a present value of $75 million. The annual standard deviation…

A: There is an option to delay the project. Same needs to be valued. Black Scholes Option pricing model…

Q: Cullumber Corp. management is expecting a project to generate after-tax income of $76,300 in each of…

A: Average After Tax Income = 76,300 Average Book Value of Equipment = 194,140

Q: Alpha Industries is considering a project with an initial cost of $8.3 million. The project will…

A: Initial cost = $8,300,000Cash Inflow = $1,730,000Useful life = 7 yearsPretax cost of debt =…

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A: A genuine option provides a company's management with the right, but not the obligation, to pursue…

Q: 1. What would be the expected net present value (NPV) of this project if the project’s cost of…

A: Multiple questions were asked & as per honoring guidelines answered the first question. Net…

Q: A firm is considering taking a project that will produce $ 14 million of revenue per year, Cash…

A: Operating cash flows can be found by deducting the operating expenses and depreciation from the…

Q: Alpha Industries is considering a project with an initial cost of $8.2 million. The project will…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: Lebleu, Incorporated, is considering a project that will result in initial aftertax cash savings of…

A: Initial cost refers to the cost that the company pays at the beginning of the project. The…

Q: A company has a project with initial investment is S40,000. It will generate $15,000 annually for…

A: Initial Investment =$ 40,000 Annual Cash flows = $ 15000 Years = 4 Beta = 2.0 Risk Free return(Rf) =…

Q: Your firm is considering financing a project that costs $1,000,000 by raising $500,000 in equity and…

A: NPV of unlevered project = - $50000 Tax rate = 24% Debt = Equity = $500000

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Q: Zoombie Brewery is considering a project with estimated operating income of $40M per year. The…

A: The cost of capital for APV method will be the WACC using the levered equity cost along with the…

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A: Initial Cost = $218,000Cash flow = cf = $49,000Weighted Average Cost of Capital = WACC = 15.8%Equity…

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A:

Q: Sommer, Inc., is considering a project that will result in initial after-tax cash savings of $1.89…

A: An initial cost of the project are used to incur at the design as well as construction process.…

Q: Och Inc. is considering a project that will result in initial after-tax cash savings of $4.2 million…

A: The weighted average cost of capital is a metric used to evaluate the average cost that the company…

Q: Alpha Industries is considering a project with an initial cost of $8.8 million. The project will…

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A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

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A: NPV or the net present value is an important capital budgeting tool.  It is the value of all future…

Q: A firm is considering a project that will generate perpetual after-tax cash flows of $16,000 per…

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Q: A project costing $100 will produce perpetual net cash flows that have an annual volatility of 35%…

A: Volatility means change in the value of project with every percentage change in project’s costs.…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.