Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.

Get a Professional Answer

Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.

100% Satisfaction Guarantee

Rate the answer you receive.

Ask SteveS Your Own Question

SteveS, MBA

Category: Homework

Satisfied Customers: 453

Experience: MBA from Top 5 US Business School, Tutoring Experience for Over Two Years

18851589

Type Your Homework Question Here...

SteveS is online now

work must be shown for all problems with the formulas with

Resolved Question:

work must be shown for all problems with the formulas with the calulation.

1) Johnson Junkyard Recyclers is considering a project with the following cash flows: Initial outlay = $13,000 Cash flows: Year 1 = $5,000 Year 2 = $3,000 Year 3 = $9,000 If the appropriate discount rate is 15%, compute the NPV of this project.

a. $4,000 b. -$466 c. $27,534 d. $8,891

2) A project costs $10,000 and is expected to return after-tax cash flows of $3,000 each year for the next 10 years. This project’s payback period is:

a. three years. b. three and one-third years. c. four years. d. 10 years.

3) A machine has a cost of $5,375,000. It will produce cash inflows of $1,825,000 (Year 1); $1,775,000 (Year 2); $1,630,000 (Year 3); $1,585,000 (Year 4); and $1,650,000 (Year 5). At a discount rate of 16.25%, what is the NPV?

a. $81,724 b. $257,106 c. $416,912 d. $190,939

4) You have been asked to analyze a capital investment proposal. The project’s cost is $2,775,000. Cash inflows are projected to be $925,000 in Year 1; $1,000,000 in Year 2; $1,000,000 in Year 3; $1,000,000 in Year 4; and $1,225,000 in Year 5. What is the project’s IRR?

a. 8.04% b. 16.75% c. 23.78% d. 19.16%

5) Manheim Candles is considering a project with the following incremental cash flows. Assume a discount rate of 10%. Year Cash Flow 0 ($15,000) 1 $10,000 2 $20,000 3 $30,000 Calculate the discounted payback period of the project.

a. 2.15 years b. 2.36 years c. 2.57 years d. 2.78 years

6) Panhandle Faucets (PF) plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must PF earn on its investments if the value of the firm is to remain unchanged?

a. 18.0% b. 13.0% c. 10.0% d. 14.2%

7) New Maverick Co. has a target capital structure of 50% debt and 50% equity. They are planning to invest in a project which will necessitate raising new capital. New debt will be issued at a before-tax yield of 12%, with a coupon rate of 10%. The equity will be provided by internally generated funds. No new outside equity will be issued. If the required rate of return on the firm’s stock is 15% and its marginal tax rate is 40%, compute the firm’s cost of capital.

a. 13.5% b. 12.5% c. 7.2% d. 11.1%

8) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows: Cost of debt 8% Cost of preferred stock 12% Cost of common stock 16%

Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?

a. $463 b. $871 c. $1,241 d. $1,568

9) Given the following information on T & T, Inc. capital structure, compute the company’s weighted average cost of capital. The company’s marginal tax rate is 40%. Type of Percent of Before-Tax Capital Capital Structure Component Cost Bonds 40% 7.5% Preferred stock 5% 11% Common stock (internal only) 55% 15%

a. 13.3% b. 7.1% c. 10.6% d. 10.0%

10) Silver Dollar Inc. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Silver Dollar’s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Silver Dollar’s weighted average cost of capital?

I e-mail the instructor about number 5 and 8. I will let you know.

Thanks

Share this conversation

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.

JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.

Web sites like justanswer.com/legal ...leave nothing to chance.

Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.

Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.

I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.Freshfield, Liverpool, UK

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.GPHesperia, CA

I couldn't be more satisfied! This is the site I will always come to when I need a second opinion.JustinKernersville, NC

Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. EstherWoodstock, NY

Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. RobinElkton, Maryland

He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here.DianeDallas, TX