RiverRocks (whose WACC is 12.7%) is considering an acquisition of Raft Adventures (whose WACC is 14.8%). The purchase will cost $100.2 million and will generate cash flows that start at $15.9 million in one year and then grow at 4.5% per year forever. What is the NPV of the acquisition?
Q: You buy an “at the money” April call option on M&M Corp. common stock, which has a strike price of…
A: ATM calls and puts have a striking price that is equal to or extremely near to the current market…
Q: What is your monthly payment if you choose 0% financing for 48 months? $ .…
A: Mortgage amortization refers to a schedule which is prepared to shows the periodic loan payments,…
Q: 5. The payments made in a sinking fund are $5, 000 at the end of each quarter for 3 years. Assume…
A: Annual interest rate = 10% (or 0.10) Quarterly interest rate = 2.5% (or 0.025 i.e. 0.10 / 4) Amount…
Q: Directions: Match the terms in Column A with the correct definition in Column B. You may choose more…
A: Investment is sacrifice of present worth of money in order to gain return in future.
Q: Grover Contracting, Inc., is considering the purchase of a new cement truck costing $150,000. Grover…
A: Given: Year Increase in income Increase in net cash flows 0 -$150,000 -$150,000 1 $10,000…
Q: Mr. Bolen needed P27,000 as a down payment on a new Tesla car. He borrov noney from his insurance…
A: Loans are to be paid by equal periodic payments that carry the payment of interest and principal…
Q: What is the capitalized cost of a calendering machine that costs ₱1231,000 upon purchase, requires…
A: Initial cost (X) = P 1231000 Annual cost (A) = P 412000 Replacement cost (R) = P 89000 every 5 years…
Q: For the cost of equity (stock) is it better to use the current US Treasury bill rate or a…
A: For determining the cost of equity we often use the CAPM model. The CAPM model states that: Cost of…
Q: PROBLEM NO.1 Compute the PW: $3500 market value productivity attributable to equipment per year…
A: The net annual cash inflows are the productivity attributable to the asset per year. The present…
Q: 3. For the last 15 years, Tina has been receiving a 20/15/5 series discount. Find the equivalent…
A: In finance a discount series is essentially a chain of discounts. Here multiple discounts are…
Q: What is the bid-ask spread? What are the components of the bid-ask spread. Use an original example…
A: The greatest amount a buyer will pay for a security is referred to as the bid price and the lowest…
Q: Phoenix Motors wants to lock in the cost of 10,000 ounces of platinum to be used in next quarter's…
A: Here, Required Platinum is 10,000 ounces Future Contract Rate is $950 per ounces Time Period of…
Q: Discuss at least three differences between investing in common stocks and investing in bonds.
A: Common stocks are the equity securities issued by the companies to the investors whereas bonds are…
Q: the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the…
A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…
Q: BOARD АCTIVITY Instructions: 2. Data for llang-llang Trading Company are given below: Horizontal…
A: Performance of the company is evaluated at the ending of every accounting period. This performance…
Q: Calculate the mean (that is, calculate the arithmetic mean) of the following set of values. Round to…
A: Answer - Formula of Arithmetic Mean - AM = Sum of Observation ÷ Total numbers of Observations A…
Q: Q1. You plan to contrībute Ł6,000 at the end of every three months (that is, at each quarter-end) in…
A: In order to know the time period required to reach a certain financial goal of an individual or…
Q: Peter just borrowed a $50,000 business loan from the bank at 5% annual interest. He must repay the…
A: Given, Loan borrowed is $50,000 Interest rate is 5% Term of loan is 5 years.
Q: Given the information below for HooYah! Corporation, compute the expected share price at the end of…
A: Given: Year 2014 2015 2016 2017 2018 2019 Price $22.00 $58.50 $130.00 $207.00 $97.00 $27.50…
Q: 360 days To complete the sale of a house, the you accept a 240-day note for $9,000 at 7% simple…
A: Note for 240 days Value of Note = $9,000 Interest rate = 7% Third party note = $9,108 Time period…
Q: A risky security has less risk than the overall market. What must the beta of this security be? O 0…
A: The beta of the overall market is 1.00. Since the security has lesser risk than the overall market,…
Q: IRR: Mutually exclusive projects Nile Inc. wants to choose the better of two mutually exclusive…
A: Given, Two projects. Project X and project Y. Initial investment of project X is $500,000 Initial…
Q: dnd can také önly öne. Your cost of capital is 10.7%. The cash flows for the two projects are as…
A: To find the IRR in excel, We will first put the values in excel spreadsheet as shown below NOTE:…
Q: Given the following data, what should the price of the stock be? Required return: 10% Present…
A: Where,P0 = Stock value D0 = Current dividend g = growth rate in decimal format D0 ( 1 + g)…
Q: sale corporation financial statement analysis (case A-181A) - Which information is available at the…
A: Common size statement is very common statement for comparing the performance of company with others…
Q: or two years. Cnstruct à sinking fünd schedule if the lender receives #7 A borrower takes out a loan…
A: A Sinking Fund Schedule is a list of principle amounts of Bonds that will mature or be subject to…
Q: How long does it take for an investment to double in value if it is invested at 5% compounded…
A: Assuming Investment = 100 Future Value = Double of investment = 200 Interest Rate = 5% with…
Q: Need for External Financing To increase production capacity by 20%, an $8 million investment is…
A: To meet the financial requirement of business, companies raise the funds from different sources.…
Q: The Fed's action did not affect the forecasted cash flows. Вy how much did the change in the…
A: Net present value (NPV) of an alternative/project refers to the variance between the initial…
Q: Robotics stock's required return is 12.6%, the risk-free rate of return is 2.15%, and the market…
A: Required rate = 12.6% Risk free rate = 2.15% Market risk premium = 8%
Q: Historical data suggests Stock X of Company X have been consistently growing at a rate of 8% for the…
A: Stock price = D0 (1 +g)/K -g Given, D0 = Last Dividend declared D0 (1+ g) = Current Dividend…
Q: Crane Company is considering three long-term capital investment proposals. Each investment has a…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: You want to start to save for a major purchase. You can invest P320 every three months for 3 years…
A: Future Value: The future value is the amount that will be received at the end of a certain period.…
Q: You would like to have $53,000 in 13 years. To accumulate this amount, you plan to deposit an…
A: Amount to accumulate is $53,000 Interest rate is 6% Time period is 13 years To Find:- Annual…
Q: How long will it take to pay off a loan of $47,000 at an annual rate of 8 percent compounded…
A: Solved using Financial Calculator PV = 47,000 PMT = 650 I/Y = 8/12 = 0.6666666667 CPT N = 99.0104…
Q: Gee-Gee common stock returned a nifty 21.77 percent rate of return last year. The dividend amount…
A: Rate of price appreciation will be the difference between market return by stock and dividend yield…
Q: paid in local taxes i
A: Local taxes refers to the amount which is assessed by the state, and country to fund services of…
Q: After making the twenty-sixth payment on your car loan, you wanted to find out how much is left of…
A: Loan amount (PV) = $27000 Interest rate = 7.1% Monthly interest rate (r) = 7.1%/12 =…
Q: An obligation of Php 27,300 is due on Feb. 28, 2017. what is the value of this obligation on…
A: Obligation Amount is Php 27,300 Obligation Due Date is Feb-28,2017 Interest Rate (r) is 12%…
Q: Bermuda Triangle Corporation (BTC) currently has 570,000 shares of stock outstanding that sell for…
A: Stock split used to happen at the time of the company, which used to increase the number of shares…
Q: Discuss audit planning.
A: An audit is a type of professional service provided to a customer. The evaluation of accounting,…
Q: What is the implied volatility of a European call option with the following parameters? c = $3 s0 =…
A: European option: It's a contract option that allows the buyer or seller to exercise the contract…
Q: Sunblessed Juice Company sells bags of oranges and cartons of orange juice. Sunblessed grades…
A: Profit maximization is the primary goal of any business, and it is also a financial management goal.…
Q: Determine the range of the following set of values. 48 42 55 28 112 79 95 27 36 14 96 193 191
A: The range is basically the measure of dispersion. It is the dispersion which is equal to the…
Q: Analyze the change control process for the retail project's software configuration management. Your…
A: Any Development Project that retails merchandise, generally without transformation, and renders…
Q: Investor Matt has $152,000 to invest in bonds. Bond A yields an average of 9.2% and the bond B…
A: A bond is a debt instrument used to raise capital for various projects. It can be traded on the…
Q: Desribe the international versions of bonds in brief. Focus clearly on the differences between them…
A: International bond A non-domestic entity issues an international bond in a country. In most cases,…
Q: uppose that you are in the fall of your senior year and are faced with the choice of either getting…
A: Present value of an annuity with a growth rate Annuity is a series of equal payment at equal…
Q: 4. Your eldest brother applied for a term life insurance. His contribution per year is P40 000 that…
A: “Since you have posted a question with multiple sub-parts, we will solve the three sub-parts (4,5,6)…
Q: A woman wants to borrow $10,742 in order to buy a car. She wants to repay the loan by monthly…
A: Formula EMI = PV/[1-(1+R)-N]/R Where EMI - Equal monthly instalment PV - Loan amount i.e. $10,742 R…
10. RiverRocks (whose WACC is 12.7%) is considering an acquisition of Raft Adventures (whose WACC is 14.8%). The purchase will cost $100.2 million and will generate cash flows that start at $15.9 million in one year and then grow at 4.5% per year forever. What is the NPV of the acquisition?
The
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- b. Identify the IRR on the graph. The approximate IRR from the graph is %. (Round your answer to one decimal place.) c. Should OpenSeas go ahead with the purchase? (Select the best choice below.) O A. Yes, because at a discount rate of 11.5%, the NPV is negative. B. No, because at a discount rate of 11.5%, the NPV is positive. C. Yes, because at a discount rate of 11.5%, the NPV is positive. D. No, because at a discount rate of 11.5%, the NPV is negative. d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? (Note: Subtract the discount rate from the approximate IRR.) The cost of capital estimate can be off by %. (Round to one decimal place.)OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.7 million and its cost of capital is 12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? SITTE a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $ million. (Round to one decimal place.)OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.7 million and its cost of capital is 12.1%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change?
- OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $499 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $69.6 million and its cost of capital is 12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? ...K OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $498 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.1 million and its cost of capital is 12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? COL a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is milion. (Round to one decimal place.)OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $502 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $71.2 million and its cost of capital is 12.3%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve The NPV for a discount rate of 2.0% is $ million (Round to one decimal place.)
- The abc company is contemplating the purchase of a new milling machine. The purchase price of the new machine is $60,000 and its annual operating cost is $2,675.40. The machine has a life of 7 years, and it is expected to generate $15,000 in revenues in each year of its life. MARR is set at 20%a. What is the rate of return of the acquisition? (percentage value)b. how much is the cash flow excess? (whole number)c. The NPV of the investment is? (whole number)d. payback period is (2 decimal places)OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $499 milion and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.3 million and its cost of capital is 12.1% a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. e Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $ million (Round to one decimal place)OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $500 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $71.6 million and its cost of capital is 12.2% a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph & Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? a. Prepare an NPV profile of the purchase To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $ million (Round to one decimal place.)
- OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $497 million, and would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $71.1 million (at the end of each year) and its cost of capital is 12.5%. a. Prepare an NPV profile of the purchase. b. Estimate the IRR (to the nearest 1%) from the graph. c. Is the purchase attractive based on these estimates? d. How far off could OpenSeas’ cost of capital be (to the nearest 1%) before your purchase decision would change?Wansley Lumber is considering the purchase of a paper company, which would require an initial investment of $300 million. Wansley estimates that the paper company would provide net cash flows of $40 million at the end of each of the next 20 years. The cost of capital for the paper company is 13%. Should Wansley purchase the paper company? Wansley realizes that the cash flows in Years 1 to 20 might be $30 million per year or $50 million per year, with a 50% probability of each outcome. Because of the nature of the purchase contract, Wansley can sell the company 2 years after purchase (at Year 2 in this case) for $280 million if it no longer wants to own it. Given this additional information, does decision-tree analysis indicate that it makes sense to purchase the paper company? Again, assume that all cash flows are discounted at 13%. Wansley can wait for 1 year and find out whether the cash flows will be $30 million per year or $50 million per year before deciding to purchase the company. Because of the nature of the purchase contract, if it waits to purchase, Wansley can no longer sell the company 2 years after purchase. Given this additional information, does decision-tree analysis indicate that it makes sense to purchase the paper company? If so, when? Again, assume that all cash flows are discounted at 13%.The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of 50 million on a large-scale, integrated plant that will provide an expected cash flow stream of 8 million per year for 20 years. Plan B calls for the expenditure of 15 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of 3.4 million per year for 20 years. The firms cost of capital is 10%. a. Calculate each projects NPV and IRR. b. Set up a Project by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant. What are the NPV and the IRR for this Project ? c. Graph the NPV profiles for Plan A, Plan B, and Project .
