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Nimfa-mama [501]
4 years ago
15

Samson's purchased a lot four years ago at a cost of $398,000. At that time, the firm spent $289,000 to build a small retail out

let on the site. The most recent appraisal on the property placed a value of $629,000 on the property and building. Samson’s now wants to tear down the original structure and build a new strip mall on the site at an estimated cost of $2.3 million. What amount should be used as the initial cash flow for new project?

Business
1 answer:
vladimir1956 [14]4 years ago
3 0

Answer:

initial cash flow is 2,929,000

Explanation:

Attached is the table

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The Two Dollar Store has a cost of equity of 11.9 percent, the YTM on the company's bonds is 6.2 percent, and the tax rate is 40
Fofino [41]

Answer: 9.03%.

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Given: The Two Dollar Store has a cost of equity of 11.9 percent, the YTM on the company's bonds is 6.2 percent, and the tax rate is 40 percent.

Debt to equity ratio is .54

i.e. \dfrac{debt}{equity}=\dfrac{0.54}{1}\ ...(i)

Adding denominator to numerator on both the sides, we get,

\dfrac{debt+equity}{equity}=\dfrac{1.54}{1}\\\\\Rightarrow\ \dfrac{equity}{debt+equity}=\dfrac{1}{1.54}  

i.e. Weighted equity = \dfrac{1}{1.54}\ ....(ii)

From (i)

\dfrac{equity}{debt}=\dfrac1{0.54}\

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\dfrac{equity+debt}{debt}=\dfrac{1+0.54}{0.54}

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Thus, weight of debt=\dfrac{1.54}{0.54}

Now,

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</span>
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