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You are a consultant to a firm evaluating an expansion of its current business. The cash-flow
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
Net present value =
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- 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 + 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 – 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 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 + 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 millionYou 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 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 millionYou 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? YesYou 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 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 millionQuestion1: A: Currently under consideration is an investment with a beta, b, of 1.50. At this time, the risk-free rate of return, RF, is 7%, and the return on the market portfolio of assets, rm, is 10%. Calculate the Required return using capm? B: An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year. At the beginning of the year, the firm had a stock market value of $10 million. At the end of the year, it had a market value of $12 million even though it experienced a loss, or negative net income, of $2.5 million. Did the analyst’s prediction prove correct? Explain using the values for total annual return.A manager believes his firm will earn a return of 20.30 percent next year. His firm has a beta of 1.36, the expected return on the market is 15.90 percent, and the risk-free rate is 5.90 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) Required return %