Prada has ten million shares outstanding, generates free cash flows of $60 million each year and has a cost of capital of 10%. It also has $40 million of cash on hand. Prada wants to decide whether to repurchase stock or invest the cash in a project that generates free cash flows of $2 million each year. Should Prada invest or repurchase the shares? A. Repurchase B. Invest C. Indifferent between options D. Cannot say for sure
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- (1)Find the required rate of return on Oakfield stocks? (ii)What is the beta of the company's existing portfolio of assets? 4. Kangaroo and Kimiti Co.Ltd is attempting to evaluate the feasibility of investing tshs 95 million in a piece of equipment with a five year lifespan. The company has estimated the profits after taxes and cash inflows associated with the project as follows: Year Profit after Cash flow("000") taxes("000") 1 انه ای 2 3 4 5 5000 3000 9000 14000 19000 The company has 12% cost of capital. 6/17/2021 8:05:06 PM 20000 25000 30000 35000 40000 Page 1 of 2Kohwe Corporation plans to issue equity to raise $50.7 million to finance a new investment. After making the investment, Kohwe expects to earn free cash flows of $10.4 million each year. Kohwe's only asset is this investment opportunity. Suppose the appropriate discount rate for Kohwe's future free cash flows is 7.7%, and the only capital market imperfections are corporate taxes and financial distress costs. a. What is the NPV of Kohwe's investment? b. What is the value of Kohwe if it finances the investment with equity? a. What is the NPV of Kohwe's investment? The NPV of Kohwe's investment is $ million. (Round to two decimal places.) b. What is the value of Kohwe if it finances the investment with equity? The Kohwe finances stment with equity $ million. (Round decimal places.)Shaylee Corporation has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Required: 1. Is Shaylee able to invest in all of these projects simultaneously? 2-a. Calculate the profitability index for each project. 2-b. What is Shaylee's order of preference based on the profitability index? Complete this question by entering your answers in the tabs below. Req 1 Project A $ 435,000 785,000 Req 2A and 2B Is Shaylee able to invest in all of these projects simultaneously? Is Shaylee able to invest in all of these projects simultaneously? Project C $ 740,000 1,220,000 Project D $ 965,000 1,580,000
- You are looking to purchase Company A. Your projections for the EBITDA of Company A are as follows: EBITDA $21.51 Year 1 $2.0 O $19.77 $21.78 Your cost of capital is 20%. Your investment banker shows you the EBITDA multiples for the following comparable companies: Company x 5.0x Company y 5.50x Company z 6.0x Year 2 $3.0 Given the above information what is the price that you would like to offer to Company A shareholders? Not enough information Year 3 $3.5 None of the above Year 4 $4.0 Year 5 $5.0Park Company is considering an investment that requires immediate payment of $27,215 and provides expected cash inflows of $8,400 annnually for four years. Assume Park Company requires a 8% return on it's investments. A. What is the net Present Value of this investment? (PV of $1, FV of $1, PVA of $1 and FVA of $1) B. Based on NPV alone, should Park Company invest?A company has an 11% WACC and is considering twomutually exclusive investments (that cannot be repeated) with the following cash flows: a. What is each project’s NPV?b. What is each project’s IRR?c. What is each project’s MIRR? (Hint: Consider Period 7 as the end of Project B’s life.)d. From your answers to parts a, b, and c, which project would be selected? If the WACCwas 18%, which project would be selected?
- Question What is primary and secondary market? An IPO is undertaken on primary or secondary market? What is the essential job of an investment banker? Why a stock exchange is called an auction market? What are the five basis principles of finance? Your company is considering choosing one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the two projects are provided below. Gold Diamond Cost $485 000 $520 000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 105 850 153 250 225 650 245 000 250 350 117 050 162 400 275 500 255 000 260 000 Required: Identify which project should your company accept based on Discounted Payback Period method if the payback criterion is maximum of 2.5 years.A firm has the following investment alternatives (refer to image): Each investment costs $3,000; investments B and C are mutually exclusive, and the firm’s cost of capital is 8 percent. a.) What is the net present value of each investment? b.) According to the net present values, which investment(s) should the firm make? Why? c.) What is the internal rate of return on each investment?Nu Things, Inc., is considering an investment in a business venture with the following anticipated cash flow results: Assume MARR is 20% per year. Based on an internal rate of return analysis (1) determine the investment’s worth; (2) state whether or not your results indicate the investment should be undertaken; and (3) state the decision rule you used to arrive at this conclusion.
- Shaylee Corporation has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Project A 5 430,000 780,000 Project 8 $ 245,000 430,000 Required: 1. is Shaylee able to invest in all of these projects simultaneously? 2-a. Calculate the profitability index for each project. 2-b. What is Shaylee's order of preference based on the profitability index? Complete this question by entering your answers in the tabs below. Reg 1 Is Shaylee able to invest in all of these projects simultaneously? is Shaylee able to inved in all of these projects intaneously Reg Req 2A and 28 > Project C $735,000 1,215,000 Project D $360,000 1,576,00015. Sanitorium Brewing Company (SBC) must set its investment and dividend/repurchases policies for next year. It has 900,000 shares and its expected share price next year is $32.00. It can select from three independent projects, each of which will require a $3.5M investment. The projects have different risk levels, so SBC is appropriately evaluating them using different costs of capital. Assuming normal cashflows, the projected IRRS and costs of capital follow: Cost of Capital IRR 20% Project A: Project B: Project C: 17% 13% 10% 7% 9% SBC wants to maintain its 40% debt and 60% common equity capital structure, and it expects net income of $5.0M next year. If SBC also keeps its residual dividend policy (with all distributions as dividends, not share repurchases), what will its payout ratio be next year?Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments. For each alternative project, compute the (a) net present value and (b) profitability index. (Round your answers in part b to two decimal places.) If the company can only select one project, which should it choose?