Fast Securities Ltd is looking into an investment of $100,000. The investment is expected to generate a net operating profit after tax (NOPAT) of $20,000. Given the firm’s weighted average cost of capital of 10% and tax rate of 20%, calculate the economic value added (EVA) of the investment. Should the firm accept or reject the investment? Give your reason(s).

Q: U.S. Robotics (USR) has a current (and target) capital structure of 70 percent common equity and 30…

A: Capital structure(equity: debt)= 70:30 Beta= 1.2 IRR=23% Tax rate=34% Average beta of three firms=…

Q: What will be the WACC for this project?

A: As per the Q&A guidelines if multiple questions are asked at once, then the solution for the…

Q: You are a personal investor investigating the possibility of investing in Pulleys and Plugs Ltd.…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

Q: In the next year, a company has pre-tax earnings that will either be €80 or €400 with equal…

A: Risk management refers to the strategic measures taken by the company to eliminate uncertainty in…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: The rate that a business should pay, on average, to each of its security holders in order to fund…

Q: FrontLier Company is planning to acquire Stint Corp. The additional pre-tax income from the…

A: The maximum price should be equal to the present value of the total benefits from the acquisition of…

Q: Tannen Industries is considering an expansion. The necessary equipment would be purchased for $14…

A: Initial investment outlay is the expenditure which is required to purchase the asset and apart from…

Q: Turnbull Co. is considering a project that requires an initial investment of $270,000. The firm will…

A: The average rate of interest a firm pays to finance its assets say debt, equity, or preferred share…

Q: As corporate manager for acquisitions, your group is assessing a project that is expected to produce…

A: Cash flow in Year 1 = cf1 = $750Cash flow in Year 2 = cf2 = $1000Cash flow in Year 3 = cf3 =…

Q: The Hartley Hotel Corporation is planning a major expansion. Hartley is financed 100 percent with…

A: Cost of capital refers to the evaluation of a project's capability to yield returns exceeding its…

Q: Double Happiness Ltd. is considering a project with an initial start up cost of $960,000. The firm…

A: Debt-equity ratio = 0.50  Flotation cost of debt = 6.8%Flotation cost of equity = 11.4%Initial start…

Q: You are asked to evaluate the following project for a corporation with profitable ongoing…

A: Net present value is a capital budgeting techniques which makes the decision making process easier…

Q: An investor chooses to support your new venture by investing $400,000. At a tax rate of 20%, the…

A: 1.Calculation of Target Profit After tax Target Profit= 8% After tax Target Profit=400,000*8%=32000…

Q: Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will…

A: Using the format in excel

Q: Universal Exports Inc. is a small company and is considering a project that will require $650,000 in…

A: Equity = $650,000 EBIT = $155,000 Earning after tax = (EBIT-Interest)*(1-Tax rate)…

Q: If a firm is considering investing $100,000 at the end of 2021 for employee training (operating…

A: The incremental after-tax operating profit approach focuses on the impact of the investment on the…

Q: a. Estimate the company's total value. Note: Do not round Intermediate calculations. Enter your…

A: The weighted average cost of capital measures the typical cost a business pays to finance its…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: 1234EBITDA$87$107$122$127Depreciation$17$27$32$37Pretax profit$70$80$90$90Tax…

Q: What will be the WACC for this project?   (Note: Round your intermediate calculations to three…

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

Q: Alberta Inc. is considering investing in two projects, each of which has an initial investment…

A: By taking the time worth of money into account, Net Present worth (NPV), a financial statistic,…

Q: A company is looking to invest in a new plant in California. The plant will be financed with bonds…

A: Given information: Coupon rate is 6% Yield is 7% Tax rate is 40% Weighted average cost of capital is…

Q: What is primary and secondary market? An IPO is undertaken on primary or secondary market?

A: There are mainly two markets - a) Primary Market b) Secondary Market

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: The company's total value is measured with Enterprise value.  This serves as a comprehensive measure…

Q: Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm…

A: WACC is the weighted average cost of capital . Total capital = $1,708,000 Debt = $750,000 Preferred…

Q: You are considering acquiring a firm that you believe will generate cash flows of $100,000 per year…

A: in this first we have to calculate required rate and than find out present value of cash flow.

Q: After examining the NPV analysis for a potential project that would increase the firm's output by 5…

A: Capital budgeting techniques are used by companies to select the most profitable investment…

Q: Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will…

A: During the functions of providing operating activities and earning profit, company incurred certain…

Q: Turnbull Co, is considering a project that requires an initial investment of $570,000. The firm will…

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

Q: Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm…

A: Weighted average cost of capital (WACC) is used as the hurdle rate for the projects. That is…

Q: An investor is considering starting a new business. The company would require $475,000 of assets,…

A: Given: Given:

Q: You are trying to value Lucid Motors using comparables analysis. You believe Lucid Motors should be…

A: Enterprise Value / Revenue of TSLA = 10.7Revenue of Lucid Motors = $2.2 billionIt is given that…

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A: According to M&M Model, the value of the levered firm will be the sum of the value of the…

Q: You are evaluating a project that will require an investment of $18 million that will be depreciated…

A: When the business tax rate rises, several things can affect project evaluation: a. Would this…

Q: net present value of the investment if the investment is 100% equity financed? b) What is the…

A: Net Present Value and Adjusted Present Value are the methods of valuation of company or investment.…

Q: Tannen Industries is considering an expansion. The necessary equipment would be purchased for $14…

A: This is a case of capital budgeting. In capital budgeting initial outlay is the amount of initial…

Q: Shoe Building Inc. is considering a three-year project that will require an initial investment of…

A: NEt present value is the capital budgeting technique used to evaluate the various alternative of…

Q: Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will…

A: After tax cost of debt = Pretax cost of debt * (1 - tax rate) Weighted average cost of capital =…

Q: Fountain Corporation’s economists estimate that a good business environment and a bad business…

A: it is given that:         Economy Probability Low-Volatility Project Payoff…

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.