GoldPure is considering the following independent, average-risk investment projects:ProjectSize of ProjectProject IRRProject VP1.0 million12.0%Project W1.2 million11.5Project X1.2 million11.0Project Y1.2 million10.5Project Z1.0 million10.0The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-taxcost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. Ifthe company follows a residual dividend policy, what will be its plowback ratio?

Answered: of Project million nillion 1 illion 11…

Business

Accounting

of Project million nillion 1 illion 11 illion 10 illion 1C

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Consider the following cash flows on two mutually exclusive projects:Year Project A Project B0 –$58,000 –$73,0001 38,000 37,0002 33,000 46,0003 28,000 49,000The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 13 percent, and the inflation rate is 5 percent. Calculate the NPV for each project.
Kk316.
None
Five mutually exclusive projects had the following data: V W X Y Z NPV $(3,000) $56,000 $23,000 $14,000 $28,000 IRR 7% 10% 15% 13% 6% Which project is preferred?
pts) Lloyd Enterprises Year 0 1 2 WN 3 45 5 has a project which has the following cash flows: Cash Flows ($) -158,000 27,000 66,000 103,000 130,000 29,000 The cost of capital is 10 percent. The project's discounted payback period is ..years.
Net Cash Flows and NPVs for different discount rate for projects S and L are given below Net Cash Flows ($) Discount Rate (%) NPVS NPVL Year (t) Project S Project L 0% $800 $1100 0 $(3000) $(3000) 5 554.32 1 1500 400 10 161.33 2 1200 900 15 (90.74) (259.24) 3 800 1300 20 (309.03) (565.97) 4 300 1500 a) Calculate the payback period in years for the Project S and Project L i) Payback for Project S: ii) Payback for Project L: c) Calculate NPVS for 5% and NPVL for 10%. Fill the table i) NPVS at 5%: ii) NPVS at 10%: d) What is the IRR for S? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: Answer: e) What is the IRR for S? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: Answer: f) What is the cross-over rate? (Write down the equation for IRR and then Use…
Answer all the questions QUESTION 1 Questions a. After-tax cash flows for two mutually exclusive projects (with economic lives of four years each) are: Y Year Project X Project K(12,000) 5,000 01234 5,000 5,000 5,000 i. ii. iii. K(12,000) 0 0 0 25,000 The company's cost of capital is 10 percent. Compute the following: The internal rate of return for each project. The net present value for each project. Which project should be selected? Why? b. A firm is considering the purchase of an automatic machine for K6,200. The machine has an installation cost of K800 and zero salvage value at the end of its expected life of five years. Depreciation is by the straight-line method with the half-year convention. The machine is considered a five-year property. Expected cash savings before tax is K1,800 per year over the five years. The firm is in the 40 percent tax bracket. The firm has determined the cost of capital (or minimum required rate of return) as 10 percent after taxes. Should the firm…
Waterway Industries produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $520000 $210000 $65000 $795000 Variable expenses 330000 150000 58000 538000 Contribution margin 190000 60000 7000 257000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $115000 $ 25000 $(15000) $125000 Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? A. $150000 B. $140000 C. $118000 D. $100000
Question: 1. Fair Hevan Mutual fund cooperation provides investment services over 10-year period. The table below has information on some of the mutual funds they holds. Fund A C D Number of funds 9651 2752 1490 3045 Total return (%) 4.7 18.5 11.6 6.9 Based on number of funds in each category, Calculate the weighted average total return. 2. What are the other possible measures for weights, if number of mutual funds is not the best option. 3.Based on the following details on investment, calculate the expected retrun of the portfolio.
Question 4 BAG Corporation is considering the following two projects; namely Project X and Project Y: Project X Cash Flow ($) Cash Flow ($) -80,000 Project Y Year 0 -100,000 10,000 20,000 60,000 40,000 30,000 60,000 Year 1 Year 2 Year 3 5,000 Year 4 60,000 The discount rate for Project X is 9%, and the discount rate for Project Y is 10%. a) i. Calculate the payback period for each project. ii. Suppose Project X and Project Y are mutually exclusive (you can choose either one of Project X and Project Y, but cannot choose both), which project(s) should be accepted if BAG Corporation requires a payback period of 3 years? i. Calculate the profitability index for each project. b) ii. Suppose Project X and Project Y are mutually exclusive, which project(s) should be accepted when the profitability index rule is considered? c) i. Calculate the net present value (NPV) for each project. ii. Suppose Project X and Project Y are mutually exclusive, which project(s) should be accepted when the NPV…
am. 118.