You are a consultant to a firm evaluating an expansion of its current business. The annual cash flow forecasts (in millions of dollars) for the project are: Years Annual Cash Flow -91 1 - 10 19 Based on the behaviour of the firm's stock, you believe that the beta of the firm is 1.4. Assuming that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 10%, what is the net present value of the project? (Enter your answers In millons. Round your answer to 2 decimal places. Use minus sign to enter negative answers, If

You are a consultant to a firm evaluating an expansion of its current business. The annual cash flow forecasts (in millions of dollars) for the project are: Years Annual Cash Flow -91 1 - 10 19 Based on the behaviour of the firm's stock, you believe that the beta of the firm is 1.4. Assuming that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 10%, what is the net present value of the project? (Enter your answers In millons. Round your answer to 2 decimal places. Use minus sign to enter negative answers, If

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1-10 + 17 On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.44. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 11%, what is the net present value of the project?
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1-10 + 16 On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.50. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 13%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) Net present value =
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1 - 10 + 15 On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.42. Assume that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 14%. a. What is the project IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) IRR: ____% b. What is the cost of capital for the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of Capital_____%
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1 - 10 + 19 On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.30. Assume that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 15%. a. What is the project IRR? b. What is the cost of capital for the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 1-10 -100 +15 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.4. Assume that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 12%. a. What is the project IRR? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the cost of capital for the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. Does the accept-reject decision using IRR agree with the decision using NPV? a. IRR b. Cost of capital c. Does the accept-reject decision using IRR agree with the decision using NPV? Yes %
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 100 1-10 + 20 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.47. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 15%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) Net present value million
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1 - 10 + 14 On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.35. Assume that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 13%. a. What is the project IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the cost of capital for the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years 0 1-10 Cash Flow -100 +16 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.33. Assuming that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 15%, what is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years 0 1-10 Cash Flow -100 +15 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.4. Assuming that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 12%, what is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places. Net present value million
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 1-10 -100 +14 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.35. Assuming that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio-is 13%, what is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places. Net present value million
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years 0 1-10 Cash Flow -100 +17 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.39. Assume that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 14%. a. What is the project IRR? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the cost of capital for the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. Does the accept-reject decision using IRR agree with the decision using NPV? > Answer is complete but not entirely correct. a. IRR 17.12 % b. Cost of capital 17.22 % c. Does the accept-reject decision using IRR agree with the decision using NPV? Yes
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow -10 1-5 +4 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.2. Assume that the project has the same risk as the firm overall. Given that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 15%, would you accept or reject the project? Аcсept Reject