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Reika [66]
2 years ago
15

Deep mines has 14 million shares of common stock outstanding with a beta of 1.15 and a market price of $42 a share. there are 90

0,000 shares of 9 percent preferred stock outstanding valued at $80 a share. the 10 percent semiannual bonds have a face value of $1,000 and are selling at 91 percent of par. there are 220,000 bonds outstanding that mature in 17 years. the market risk premium is 11.5 percent, t-bills are yielding 7.5 percent, and the firm's tax rate is 32 percent. what discount rate should the firm apply to a new project's cash flows if the project has the same risk as the firm's typical project?

Business
1 answer:
Ugo [173]2 years ago
3 0
Check the attached file for the answer.

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Exercise 11-6 Net present value LO P3 A new operating system for an existing machine is expected to cost $520,000 and have a use
Citrus2011 [14]

Answer:

NPV of investment 1: $509,131

NPV of investment 2: $269,513

Explanation:

initial investment -$520,000

6 year useful life, depreciation per year = ($520,000 - $10,000) / 6 = $85,000

free cash flow per year = $150,000 + $85,000 = $235,000

free cash flow last year = $235,00 + $10,000 = $245,000

NPV = -$520,000 + $235,000/1.1 + $235,000/1.1² + $235,000/1.1³ + $235,000/1.1⁴ + $235,000/1.1⁵ + $245,000/1.1⁶ = -$520,000 + $213,636 + $194,215 + $176,559 + $160,508 + $145,917 + $138,296 = $509,131

initial investment -$380,000

8 year useful life, depreciation per year = ($380,000 - $20,000) / 6 = $60,000

free cash flow per year = $60,000 + $60,000 = $120,000

free cash flow last year = $120,00 + $20,000 = $140,000

NPV = -$380,000 + $120,000/1.1 + $120,000/1.1² + $120,000/1.1³ + $120,000/1.1⁴ + $120,000/1.1⁵ + $120,000/1.1⁶ + $120,000/1.1⁷ + $140,000/1.1⁸= -$380,000 + $109,091 + $99,174 + $90,158 + $81,962 + $74,501 + $67,737 + $61,579 + $65,311 = $269,513

5 0
3 years ago
Simple difinition of organized​
svp [43]

Answer:

Make arrangements or preparations for (an event or activity)

5 0
3 years ago
What are 3 helpful habits (to prepare for a big test)?<br><br> Plz be specific.
Alenkinab [10]
Hello!

Here are some tips:

• Get a good night's sleep. Believe me, if I don't get at least 7 hours of sleep before a big test, my mind won't function properly and I'll forget everything I'd practised. So, please, get enough sleep.

• Eat something good before the test. It'll help you. When your belly is full, almost everything is okay! :D Seriously, eat enough so that you wouldn't get hungry during the test, and you'll have less to think about. Also, make sure the food doesn't contain too much sugar.

• Take breaks when you're studying. Do NOT cram all those facts in your head, because they won't stay there. Set up a schedule and designate a specific part of every day to studying, and it shouldn't be longer than half an hour.

• Here's a bonus tip I've learned from past experiences. Please don't use TVs, phones, and anything that will distract you. If you need a calculator, USE A CALCULATOR, and not an online one. Otherwise you won't be as productive and it'll definitely distract you.
6 0
2 years ago
Read 2 more answers
Jim would like to learn more about what it's like to be a in college.without having to take college classes or difficult exams.
MAVERICK [17]
B Advanced Placement
5 0
2 years ago
Lindsay needs to purchase a car. The car she is planning o in purchasing costs $8,000
Firlakuza [10]

Answer:

1. $6,000

2. $60

3. $8,180

Explanation:

With the down payment equal to $2,000, amount Lindsay need finance to purchase car would be: $8,000 - $2,000 = $6,000

As Lindsay would pay for a term of 3 years

=> In each year, the amount finance is: $2,000

In one year, with APR = 3%, interest Lindsay has to pay on the loan of $2,000 is: $2,000 x 3% = $60

=> In three years, amount Lindsay pay for interest for the total finance is: $60 x 3 = $180

The actual cost of the car for Lindsay to own:

Actual cost = down payment + finance + interest = $2,000 + $6,000 + $180

= $8,180

8 0
2 years ago
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