Accounting

By how much did the change in the WACC affect the project’s forecasted NPV? Question 18 Last month, Lloyd’s Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s […]

Question 16 To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm’s tax rate is 40%, what

Last month, Lloyd’s Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the

What is the project’s MIRR? Question 13 Ingram Electric Products is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s MIRR can be less than the WACC (and even negative), in which case it will be rejected. Old WACC: 11.00% Year 0 1

What is the project’s discounted payback? Question 12 Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback? WACC: 10.00% Year 0 1 2 3 Cash flows -$950 $500 $500 $500 2.22years 2.04years 2.75years 1.69years 2.35years Place Your Order Here!

What is the project’s MIRR? Question 11 Ingram Electric Products is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected. WACC: 9.50% Year 0 1

What is the project’s payback? Question 10 Stern Associates is considering a project that has the following cash flow data. What is the project’s payback? Year 0 1 2 3 4 5 Cash flows -$950 $300 $310 $320 $330 $340 3.06 years 3.24 years 2.97 years 3.70 years 3.49 years Place Your Order Here!

What is the project’s discounted payback? Question 9 Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback? WACC: 10.00% Year 0 1 2 3 Cash flows -$900 $500 $500 $500 $500 1.88 years 2.09 years 2.29 years 2.52 years 2.78 years Place Your

If the firm’s tax rate is 40%, what is the component cost of debt for use in the WACC calculation? Question 8 To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells

What is the project’s discounted payback?  Question 7 Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback? WACC: 10.00% Year 0 1 2 3 Cash flows Place Your Order Here!