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- Required information [The following information applies to the questions displayed below.] Metro Car Washes, Inc. is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash flows for each year, and the net income for each year are presented in the following schedule. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life. Year 0 1 2 3 4 5 Initial Cost and Book Value $345,000 230,000 138,000 69,000 23,000 0 Annual Net After-Tax Cash Flows $162,000 141,000 120,000 99,000 78,000 Annual Net Income $47,000 49,000 51,000 53,000 55,000 Management uses a 14 percent after-tax target rate of return for new investment proposals. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the project's payback period. Assume that the cash flows in…JPX's decides to value a property based on its expected net after-tax monthly cash flow of $7,400, as if it were a perpetuity. Assuming the next cash flow is received one-month from today, what is the property value given a discount rate of 11.52% APR, compounded monthly? A) 770808 B) 770833 C) 770865 D) 770912Please clearly and thoroughly explain the steps on how you determine the expected levered-before-tax-annual rate of return on your capital and please determine the portion of the return that is expected from the annual cashflows and the portion that is expected as a result of property price appreciation. The Excel Spreadsheet is included as an attached image for the information. Thank You in advance!
- You have been appointed as a financial consultant by the directors of Cochin Holdings. They require you to calculate the cost of capital of the company. The following information is available on the financing of the company: · R10 000 000, financial lease due in 5 years and the current yield-to-maturity is 10%. Prepare a loan amortization scheduleqAn investor is considering to purchase an apartment for sh. 1 million to be financed by 30% equity and 70% mortgage. This price includes a building value of Sh.900,000, which will be depreciated on a straight-line basis over 27.5 years. The projected Net operating income is Sh. 100,000 during the first year and is expected to increase at 3% per annum over a five-year holding period. The property value is also projected to increase at 3 % per year over a five-year holding period.The investor is in the 28 percent tax bracket for ordinary income and capital gains. The lender has offered a conventional, fixed rate, constant payment loan for sh. 700,000 at a 10 percent interest rate (with monthly payments) over a 15-year term. Required:Calculate the net present value of free cash flows to equityAn owner can lease her building for 100,000 per year for three years.aThe explicit cost of maintaining the building is cost 35,000 and the implicit cost is 50,000.All revenue are received and cost are borne at the end of each year.If the interest rate is 4 percent,determine the present value of the stream of: (I) accounting profit(II) ecenomic profits
- Suppose an industrial building can be purchased for $2,500,000 and is expected to yield cash flows of $180,000 in each of the next five years. (Note: assume payments are made at end of year.) If the building can be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five-year holding period. A) 0.09%. B) 4.57%. C) 9.20%. Page 4 of 6 D) 10.37%Assume a broker has listed a grocery-anchored shopping center with 100,000 sf of total retail space for lease, at a price of $9 million at an advertised 7.0% cap rate in a suburban market approximately 30 miles northwest of Pittsburgh. a. Calculate the price in dollars per square feet (show your work). b. Calculate the net operating income (NOI) (show your work)? C. If you purchase this asset and hold it for five years, what is a reasonable exit cap rate you could obtain for the sale, assuming no major investment in the property while you own it, only routine maintenance (no roof replacement or mechanical upgrades)?Greater Findlay Development Consortium is preparing to open a new retail strip mall and have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent plus a percentage of the gross sales generated each year. The cash flows from each of the businesses has approximately the same amount of risk. The business names, annual expected cash flows, and initial capital outflow for each of the businesses that would like to lease space in the strip mall are provided below. Greater Findlay Development Consortium uses a 12% hurdle rate which is its cost of capital. All business will be evaluated based on 4-year term because the contract will expire in four years. Video Now Apple Garden Croger Mart Horizon Wireless Initial Capital Outlay ($200,000) ($298,000) ($248,000) ($272,000) Annual Net Cash Flows Year 1 65,000 100,000 80,000…
- A3) Finance A property can be purchased in cash or through an equivalent plan, over 20 years, consisting of equal monthly payments (before monetary correction), at the effective rate of 8.60% per year. Monetary correction is made monthly, using the reference rate (RT). Throughout this period, the monthly average RT was 0.60%. Knowing that the twentieth installment was $2170 (after monetary correction), obtain the cash value of the property.4You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 78 38 40 12 14 Year a. Total value b. Laputa's equity 2 $ 98 48 50 15 17 3 $ 113 53 60 18 20 4 $ 118 58 60 18 22 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 13%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
