ear 4 34,000 e company should use a desired rate of return of 10 percent to ct. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the proposed project. Should Mr. Melton approve the project? ary of the cash flow forecast and she points out that the advise his project will be tax deductible. The depreciation is expected income tax rate is 30 percent per year. Use this information to r Compute the net present value of the project based on the rev the project?
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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
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- Antonio Melton, the chief executive officer of Finch Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $417,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 $91,000 Year 2 $101,000 Year 3 $123,000 Year 4 $191,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 12 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax…Antonio Melton, the chief executive officer of Solomon Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $418,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 $86,000 Year 2 $97,000 Year 3 $122,000 Year 4 $186,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 10 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax…Antonio Melton, the chief executive officer of Gibson Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $401,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 504,000 Year 2 $99,000 Year 3 $123,000 Year 4 $194,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 10 percent to compute net present value to evaluate the viability of the proposed project (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a. Compute the net present value of the proposed project. Should Mr. Meliton approve the project?
- Antonio Melton, the chief executive officer of Thornton Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $407,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 Year 3 Year 2 $100,000 Year 4 $190,000 $ 90,000 $127,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 10 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax…Antonio Melton, the chief executive officer of Melton Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $500,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 $105,000 Year 2 $120,000 Year 3 $150,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 7 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 4. $225,000 Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax…Antonio Melton, the chief executive officer of Benson Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $404,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax Year 1 $92,000 Year 2 $102,000 Year 3 $130,000 Year 4 $192,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 12 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? A b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax…
- Antonio Melton, the chief executive officer of Melton Corporation, has assembled his top advisers to evaluate an investment opportunity. The advisers expect the company to pay $500,000 cash at the beginning of the investment and the cash inflow for each of the following four years to be the following. Note that the annual cash inflows below are net of tax. Year 1 Year 2 Year 3 Year 4 $105,000 $120,000 $150,000 $225,000 Mr. Melton agrees with his advisers that the company should use a desired rate of return of 7 percent to compute net present value to evaluate the viability of the proposed project. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of the proposed project. Should Mr. Melton approve the project? b.&c. Shawn Love, one of the advisers, is wary of the cash flow forecast and she points out that the advisers failed to consider that the depreciation on equipment used in this project will be tax deductible.…The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 21 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 35,000 Sales revenue $ 18,000 $ 18,500 $ 19,000 $ 16,000 Operating costs 3,800 3,900 4,000 3,200 Depreciation 8,750 8,750 8,750 8,750 Net working capital spending 410 460 510 410 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) c. Suppose the appropriate discount rate is 11 percent. What is the NPV of the project?The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 27,000 Sales revenue $ 14,000 $ 14,500 $ 15,000 $ 12,000 Operating costs 3,000 3,100 3,200 2,400 Depreciation 6,750 6,750 6,750 6,750 Net working capital spending 330 380 430 330 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
- The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 41,000 Sales revenue $ 21,000 $ 21,500 $ 22,000 $ 19,000 Operating costs 4,400 4,500 4,600 3,800 Depreciation 10,250 10,250 10,250 10,250 Net working capital spending 470 520 570 470 ? a. Compute the incremental net income of the investment for each year. Year 1, Year 2, Year 3, Year 4 b. Compute the incremental cash flows of the investments for each year. Year 1, Year 2, Year 3, Year 4 c. Suppose the appropriate discount rate…A company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of shs 700,000 at time 0 and shs.1.0 million in year 1. After tax cash flows of shs.250,000 are expected in year 2, shs.300,000 in year 3, shs. 350,000 in year 4, and shs. 400,000 each year thereafter through year 10. b) Required i) return? What is the projects internal rate of What would be the case if the required rate of return ii) were 10 percent? Swipe up for filters Add a caption.1.Sweets, Etc., Inc. plans to undertake a capital expenditure requiring P2 million cash outlay. Below are the projected after-tax cash inflow for the five-year period covering the useful life. The company's tax rate is 35%.Year 1=600, Year 2= 700, Year 3=480, Year 4=400, Year 5=400. The founder and president of the candy company believes that the best gauge for capital expenditure is cash payback period and that the recovery period should not be more than 75% of the useful life of the project or the asset. Should the company undertake the project? * a.No, since the payback period is 4 years or 80% of the useful life of the project. b.Yes, since the payback period is 3.55 years or 71% of the useful life of the project. c.No, since the payback period extends beyond the life of the project. d.Yes, since the payback period is 4 years and still shorter than the useful life of the project. 2.Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its…