You own building V and building S. The next cash flow for each building is expected in 1 year. Building V has a cost of capital of 17.20 percent and is expected to produce annual cash flows of $369,045.00forever. Building S is worth $6,214,435.00 and is expected to produce annual cash flows of $169,044.00 forever. Which assertion is true?O Building V is more valuable than building S and building V is more risky than building SBuilding S is more valuable than building V and building S is more risky than building VO Building V is more valuable than building S and building S is more risky than building VO Building S is more valuable than building V and building V is more risky than building SBuilding V and building S either have the same value, the same level of risk, or both the same value and level of risk.لا

forew You own building V and building S. The next cash flow for each building is expected in 1 year. Building V has forever. Building S is worth $6,214,435.00 and is expected to produce annual cash flows of $169,044.00 O Building Vis more valuable than building S and building V is more risky than building S O Building S is more valuable than building V and building S is more risky than building V Building V is more valuable than building S and building S is more risky than building O Building S is more valuable than building V and building V is more risky than building O Building V and building S either have the same value, the same level of risk, V S or both the same value and level

forew You own building V and building S. The next cash flow for each building is expected in 1 year. Building V has forever. Building S is worth $6,214,435.00 and is expected to produce annual cash flows of $169,044.00 O Building Vis more valuable than building S and building V is more risky than building S O Building S is more valuable than building V and building S is more risky than building V Building V is more valuable than building S and building S is more risky than building O Building S is more valuable than building V and building V is more risky than building O Building V and building S either have the same value, the same level of risk, V S or both the same value and level

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

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NEED HELP ASAP! Imagine you are going to have a project to sell a Massive Machinary you owned. You have invested THB 15,500,000 for the Machine. This machine is expected ot have a life of 7 years. The expected cash flow for the next seven years are as follow; Year 1 - THB 900,000 Year 2 - THB 950,000 Year 3 - THB 1,200,000 Year 4 - THB 2,500,000 Year 5 - THB 2,500,000 Year 6 - THB 3,640,000 Year 7 - THB 5,560,000 Discount Rate is at 7% per year. Please find the Present Value for each year and also the Net Present Value. Then, see if you should accept this project or not? Give me a solid support for your answer
7. The Alaska Oil Company is deciding whether to drill for oil on a tract of land that the company owns. The company estimates that the project would cost $5.6 million today. The firm estimates that once drilled, the oil will generate positive cash flows of $2.8 million a year at the end of each of the next four years. While the company is fairly confident about its cash flow forecast, it recognizes that if it waits two years, they would have more information about the local geology as well as the price of oil. Alaska Oil estimates that if it waits two years, the project would cost $6.3 million. Moreover, if it waits two years, there is a 90% chance that the cash flows would be $2.94 million a year for four years, and there is a 10% chance that the cash flows will be $1.54 million a year for four years. Assume that all cash flows are discounted at a 10% WACC. If the company chooses to drill today, what is the project's net present value (in millions)? a. $2.3134 b. $2.9875 c. $3.2756…
A project that costs $2,300 to install will provide annual cash flows of $730 for each of the next 5 years. a. Calculate the NPV if the opportunity cost of capital is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV b. Is this project worth pursuing? Yes O No c. What is the project's internal rate of return IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %24
34. The annual income from the mine is P100,000 and the life of the mine is 25 years. Find the price that an investor is willing to pay if he considers that money is worth 5% and if he is to accumulate a sinking fund at 7% in order to replace the capital he invested?
aa.1
5
You are considering an open-pit mining operation. The cash flow pattern is somewhat unusual since you must invest in some mining equipment, conduct operations for two years, and then restore the sites to their original condition. You estimate the net cash flows to be as follows: N Cash flow $1,600,000 1,500,000 1,500,000 -700,000 What is the approximate rate of return of this investment? (a) 25% (b)38% (c) 42% (d)62% 123
A new investor is considering investing in the Real Estate Investment Trust (REIT) with the following cash flows. REIT investment Cash Outflow RM20000 Year Cash Inflow RM15000 RM8000 RM12000 RM10000 RM8000 RM5000 If the cost of capital is 15% per annum, advise the investor on the course of action.
It is estimated that a certain piece of equipment can save as $25,000 per year in labour and materials. The equipment has an expected life of six years and no market value. If the company must earn a 20% annual return on such investments, select the appropriate cash flow diagram that represents this transaction. O A. O B. P= ? A = $25,000 P= ? A= $25,000 1 2 3 4 End of Year 5 6 2 3 4 End of Year Oc. O D. A= $25,000 A = $25,000 ! 3 End of Year 5 6 1 2. 3 6 End of Year P=? P=? Lütfen birini seçin: O A. C О В. В O C. A O D. D
9
s Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume /= 12% per year. P-7 2000 1800 1400 1600 1200 1000 year The present worth of the chrome plating is determined to be $
You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.4 million today and $4.8 million in one year. The government will pay you $21.8 million in one year upon the building's completion. Suppose the interest rate is 10.2% a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)

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