1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
liraira [26]
3 years ago
11

Panelli's is analyzing a project with an initial cost of $139,000 and cash inflows of $74,000 in Year 1 and $86,000 in Year 2. T

his project is an extension of current operations and thus is equally as risky as the current company. The company uses only debt and common stock to finance its operations and maintains a debt-equity ratio of .39 The aftertax cost of debt is 5.1 percent, the cost of equity is 13.2 percent, and the tax rate is 21 percent. What is the projected net present value of this project
Business
1 answer:
nikklg [1K]3 years ago
4 0

Answer:

The projected net present value of this project is -$2,386

Explanation:

In order to calculate the projected net present value of this project First we have to calculate the WACC of the firm as follows:

WACC=[(Weight of common stock*Corresponding cost)+(Weight of debt *Corresponding cost)[cost of debt is after tax)]/Total weight

WACC=[(1.0*0.132)+(0.39*0.051)]/1.39

WACC=10.92%(approx)

NPV=Present value of cash inflows-Initial Investmet

Therefore, NPV={[$74,000/(1.1092)]+[$86,000/(1.1092)∧2]}-$139,000

NPV=$66,714+$69,900-$139,000

NPV=-$2,386

The projected net present value of this project is -$2,386

You might be interested in
9/10
docker41 [41]

Answer:

d

Explanation:

7 0
3 years ago
Read 2 more answers
The following changes took place last year in Pavolik Company’s balance sheet accounts:
irinina [24]

Answer:

1. $260

2. $103

Explanation:

1. Calculation to determine the net cash provided by operating activities for the year

PAVOLIK COMPANY

STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)

FOR THE YEAR ENDED

Particulars Amount

Cash flow from operating activities

Net Income $100

Adjustments to reconcile net income to net cash provided by operating activities

Adjustment for non cash effects

Depreciation $82

Loss on sale of land $21

Gain on sale of investments -$25

Change in operating assets & liabilities

Increase in accounts receivable -$24

Decrease in inventory $58

Increase in prepaid expenses -$19

Increase in accounts payable $62

Decrease in accrued liabilities -$24

Increase in income taxes payable $29

Net cash flow from operating activities (a) $260

Therefore Using the indirect method the net cash provided by operating activities for the year is $260

2. Preparation of a statement of cash flows for the year

PAVOLIK COMPANY

STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)

FOR THE YEAR ENDED

Particulars Amount

$

Cash flow from operating activities (a) $260

Cash Flow from Investing activities

Property,plant and equipment purchased -$395

Long term investment sold $46

Land sold $24

Net cash Flow from Investing activities (b) -$325

(-$395+$46+$24)

Cash Flow from Financing activities

Cash dividends paid -$18

Common stock purchased -$96

Bonds issued $204

Net cash Flow from Financing activities (c) $90

(+$204-$18-$96)

Net Change in cash c=a+b+c -$25

Beginning cash balance $128

Closing cash balance $103

($128-$25)

Therefore the statement of cash flows for the year is $103

4 0
3 years ago
Behaving in an acceptable manner within a workplace environment is refered to as workplace etiquette.
alexandr402 [8]
True because workplace etiquette is behaving with manners and kindness
8 0
3 years ago
Read 2 more answers
If you wanted to build a structure on a river bank, you should build the structure __________ to maximize its lifetime.
Marina CMI [18]

Answer:

Above the point bar

Explanation:

channelization

Straightened sections of the river channel are lined with concrete to increase the rate of flow and reduce bank collapse

Advantages of channelization

Improves rate of flow

Benefits transportation

Reduces bank collapse

6 0
3 years ago
Consider the following two situations: (1) you buy a Porsche produced in Germany, (2) you buy a Volkswagen produced in the U.S.
kondor19780726 [428]

The purchase of a Porsche produced in Germany has a direct effect on net exports

<h3>What is net export?</h3>

Net exports is total export less import. Import is when a good or service is brought into a country from a foreign country. Import reduces the value of the net exports. Export is when a good produced in a country is sold in a foreign country.

To learn more about imports, please check: brainly.com/question/26497713

7 0
2 years ago
Other questions:
  • ________ are obstacles in which the design of organization structure, information processing, and reporting relationships, imped
    9·1 answer
  • About _____ percent of those who use tobacco are aged 18 to 25.
    11·1 answer
  • New batteries are needed to power our electronic devices—our cell phones, tablets, and computers—and that market is exploding. R
    8·1 answer
  • What causes the economy to move from its short-run equilibrium to its long-run equilibrium? the government must increase spendin
    12·1 answer
  • Entries to Write Off Accounts Receivable Creative Solutions Company, a computer consulting firm, has decided to write off the $1
    6·1 answer
  • Hommie Delicacies produces two products (Orapine and Banango) from a joint process. The joint cost of production is GH¢80,000. F
    9·1 answer
  • Asset allocation refers to ________. A. the allocation of the investment portfolio across broad asset classes B. the analysis of
    7·2 answers
  • In july, noel &amp; vang company purchased materials costing $23,100 and incurred direct labor cost of $19,800. manufacturing ov
    11·1 answer
  • The best gift i ever received​
    8·2 answers
  • price discrimination will occur when a firm can segment its existing and potential customers into different groups based on:
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!