3) You are considering undertaking a project where a $12 million investment would generate after- tax cash flows of $3.5 million per year for 5 years. Assume the all-equity financing rate for this project is 10%, and that you face a 21% marginal tax rate.
a. What is the NPV and is this a good project?
b. Now assume that you will finance the project by borrowing $10 million at a 7% rate, and that the note is repaid at $2 million per year (plus interest on the outstanding principal) for the five year project life. What is the APV?
c. Now assume that you are considering borrowing in Japan. Your rate will be 3% and the Yen is expected to appreciate at 3% per year. The other financing terms will remain the same. What is the new APV?
Answers
a. Net present value (NPV) can be defined as the difference between the present value of cash inflows and the present value of cash outflows over time. In this case, the NPV of the project will be -$7.57 million.
PV of cash flows = $3.5 million/ (1 - 0.21) = $4.43 million
NPV = PV of cash flows - Initial investment= $4.43 million - $12 million= -$7.57 million
Since the NPV is negative, this is not a good project.
b. In this scenario, we are going to use the Adjusted present value (APV) technique. The APV is calculated as follows:
APV = NPV + PV of financing side
NPV = -$7.57 million
PV of financing side = PV of tax shield
PV of tax shield = Interest x Debt tax rate x PV factor for tax shield= $7 million x 0.21 x 3.433 = $5.79 million
APV = -$7.57 million + $5.79 million = -$1.78 million
Since the APV is still negative, this is not a good project.
c. When borrowing from Japan, the APV can be calculated as follows:
Step 1: Calculate the yen cash flowsYen cash flows = $3.5 million x 110 yen/ $ x 5 years = 1,925 million yen
Step 2: Calculate the yen discount factor
Yen discount factor = 1 / (1 + 0.03) ^ t= 1/ (1.03 ^ 1) = 0.9709
Yen PV of cash flows = Yen cash flows x Yen discount factor= 1,925 million yen x 0.9709= 1,867 million yen
Step 3: Convert yen into dollars
Yen to dollar exchange rate = 110 yen/$PV of cash flows = 1,867 million yen / 110 yen/$= $17 million
Step 4: Calculate NPV and APVNPV = PV of cash flows - Initial investment= $17 million - $12 million= $5 million
PV of tax shield = Interest x Debt tax rate x PV factor for tax shield= $5 million x 0.21 x 3.433 = $3.59 million
APV = NPV + PV of financing side= $5 million + $3.59 million= $8.59 million.Since the APV is positive, this is a good project.
Therefore, borrowing from Japan will provide the highest APV for this project.
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Related Questions
What does a mission statement typically describe?
A mission statement typically describes
A. An employees concerns
B. A company’s values
Answers
Answer:
b
Explanation:
Answer:
B. A company’s values
Explanation:
You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $32.5 million. NoEquity, Inc., finances its $65 million in assets with $64 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $65 million in assets with no debt and $65 million in equity. Both firms pay a tax rate of 30 percent on their taxable income. Calculate the net income and return on assets for the two firms. Return on assets = net income / total assets Accounting equation: total assets = total liabilities debt + total equity
Answers
Answer:
A. NoEquity $18.27million
NoDebt $22.75million
B. NoEquity 28.11%
NoDebt 35%
Explanation:
A. Calculation to determine the net income
NoEquity Inc., NoDebt Inc.,
Operating income $32.5 million $32.5 million
Less: Interest $6.4 million $0
($64m × 0.1)
Taxable income $ 26.10million $32.5 million
Less: Taxes (30%) ($7.83million) ($9.75million)
NET INCOME $18.27million $22.75million
Therefore The Net income for the two firms are :
NoEquity $18.27million
NoDebt $22.75million
B. Calculation to determine the Return on assets
NoEquity
Return on assets =$18.27million/$65 million
Return on assets =0.2811*100
Return on assets =28.11%
NoDebt
Return on assets = $22.75million/$65 million
Return on assets =0.35*100
Return on assets =35%
Therefore The return on assets for the two firm are:
NoEquity 28.11%
NoDebt 35%
PLEASE!!!
Which of the following is an example of economic globalization?
A. a chicken farm supplying eggs to the neighboring village
B. a mobile grocery selling organic food across New York City
C. an on-demand beauty salon that provides home service
D. a Japanese store selling tea and spices from South Asia
Answers
Answer:
The example that represents economic globalization is:
D. a Japanese store selling tea and spices from South Asia
Explanation:
The reason behind this answer is that globalization is the concept designed to understand the economic activity of a certain country outside its borders and engaging commercial activities in its zone with different countries or in zones further away. Then, because they are doing business around the globe they are doing a globalization economy.
Which of the following must be
certified by the FAA to be hired at
airports?
A. Air-traffic controllers
B. CB radio operators
C. Police Dispatchers
Answers
That will be Air - traffic controllers
mark brainliest pls
6. What type of force is your answer in number 4?
Answers
Answer:
What was your answer in number 4?
What does Clive Barrow mean when he says, "you can choose to be bitter or you can choose to be better"?
Answers
What Clive Barrow means by these terms has to do with the fact that people are to choose where they want to be in life and how they respond to the situations that they experience in life.
How to get the meaning of these wordsWhen people are born on earth, they usually have a lot of experiences daily. Most of these experiences can either make a person or it could destroy them.
Some people fall under the category of those that allow the issues that they face to get the upper hand. They dwell in on them till they get consumed. Others are well able to get the issues they have turned around in a way that it helps them as a stepping stone to achieve greatness.
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MOTIVATION TIME
Success doesn’t just find you. You have to go out and get it.
Answers
Answer:
thnak u that made my day
Explanation:
first city bank pays 6 percent simple interest on its savings account balances, whereas second city bank pays 6 percent interest compounded annually. if you made a $72,000 deposit in each bank, how much more money would you earn from your second city bank account at the end of 10 years?
Answers
One would earn $60,637.56 more from the Second City Bank account at the end of 10 years.
What is savings account?
A savings account is a type of bank account that is designed for individuals to save and grow their money over time. Savings accounts typically offer a lower interest rate than other types of accounts, such as checking accounts or money market accounts, but also offer a higher level of security and stability for the deposited funds.
Savings accounts usually have a minimum balance requirement and may also have fees for certain transactions or services, such as account maintenance or withdrawing funds. They may also have limits on the number of transactions that can be made each month.
Savings accounts are a safe and convenient way for individuals to save and grow their money, and are often used for short-term or long-term financial goals, such as building an emergency fund, saving for a down payment on a home, or saving for retirement. Interest earned on savings accounts is often compounded, which means that the interest is calculated on the balance of the account and is added to the balance periodically, increasing the overall return on the investment.
To solve the problem:
Calculate the amount of money you would earn from your savings account at First City Bank, you would use the following formula:
Earnings = Balance * Interest Rate * Time
In this case, your balance is $72,000, the interest rate is 6 percent, and the time is 10 years, so your earnings would be:
Earnings = $72,000 * 0.06 * 10 = $43,200
To calculate the amount of money you would earn from your savings account at Second City Bank, you would use the following formula:
Earnings = Balance * (1 + Interest Rate)^Time
In this case, your balance is $72,000, the interest rate is 6 percent, and the time is 10 years, so your earnings would be:
Earnings = $72,000 * (1 + 0.06)^10 = $103,837.56
To find the difference in earnings between the two banks, you would subtract the earnings from First City Bank from the earnings from Second City Bank:
Difference in Earnings = $103,837.56 - $43,200 = $60,637.56
Therefore, you would earn $60,637.56 more from your Second City Bank account at the end of 10 years.
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What do you think are the most important components of budgeting? Why?
Answers
Answer:
I would have to say figuring out ur cash flow where its going after u earn it and making sure u keep track of ur savings
Explanation:
Which of the following factors undermines the effectiveness of Six Sigma?
a) It solves problems in an existing framework but fails to challenge that framework and create a new one in its place.
b) It uses a method known as DMAIC, and this makes it a weak option for reducing operating costs.
c) The method has a qualitative, not quantitative, focus that results in less credibility.
d) It is not useful in manufacturing industries, where products and processes are mass customized and mass standardized.
Answers
Among the given options, the factor that undermines the effectiveness of Six Sigma is that "It is not useful in manufacturing industries, where products and processes are mass customized and mass standardized.
"Six Sigma is a data-driven method that focuses on eliminating defects or failures to improve quality, reduce costs, and increase customer satisfaction. Six Sigma has been successful in many industries such as finance, healthcare, IT, and service industries, including manufacturing.
However, the Six Sigma method is not useful in manufacturing industries where products and processes are mass customized and mass standardized.
option (d) It is not useful in manufacturing industries, where products and processes are mass customized and mass standardized.
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Describe how surveillance of our telephones has changed over the years. explain what is different about how silicon valley companies have built their networks and what it means for the general public and law enforcement? explain why it is risky for tech companies to build a "backdoor". soghoian poses the question, "should billions of people be using devices that are wire-tap friendly?" explain why you think our devices should or should not be wiretap friendly.
Answers
Answer:
All communication way back used to be wiretapped, but now companies have been able to encrypt their data for protection of their information against wiretapping.
Companies like silicon valley has taken the bold step in securing their data from been hacked.
The back door is risky because if a person or people exposes their information to others, their information will be at risk because of hackers who might exploit their privacy or sensitive documents.
Finally, the idea of devices to be wiretapped is not a good idea, because most people want heir privacy, for this it is termed illegal to access one's privacy without the authorization from the person.
Explanation:
Solution
Before now all communication used to be wiretapped. presently, companies are encrypting data , for the purpose of this data to not be easily wiretapped.
Silicon valley companies have secured their devices through encryption unlike other companies. what this implies is that it will be tough for police to arrest criminals, but the normal or average people will have capacity to communicate or interact much better.
The back door method is risky because, presently in today's world there are people that are specialist in hacking, so if no backdoor exist, then there will be no room for anyone to hack into someone's phone.
It is considered a risk if your phone is exposed to others to easily access your private information.
I don't like the idea for devices should be wiretapped, this is because people need their privacy, they can't have that when their phones are wiretapped.
In general it is illegal and not right.
Answer:
Describe how surveillance of our telephones has changed over the years. It was originally manual, wires were connected by hand, and calls were recorded by tape. Now servalinec features are built into the networks and are now no longer needed to be done manually.
Explain what is different about how Silicon Valley companies have built their networks and what it means for the general public and law enforcement? Silicon Valeys have built strong encryption technology into their communication products. Which makes surveillance extremely difficult. This means for the general public and law enforcement that their communications cannot be easily wiretapped.
Explain why it is risky for tech companies to build a “backdoor”. When a backdoor is created in a communications network or piece of technology, there is now way of knowing who would use it. There is no way of knowing if it would be used by good guys or bad guys.
Soghoian poses the question, “Should billions of people be using devices that are wire-tap friendly?” Explain why you think our devices should or should not be wiretap friendly. I don't like the idea that devices should be wiretapped, this is because people need their privacy, they can't have that when their phones are wiretapped.
Explanation:
edg
in which managerial task are work relationships structured to facilitate the interaction and cooperative efforts of organizational members, all of whom strive to achieve organizational goals? group of answer choices planning leading reviewing controlling organizing
Answers
While planning, leading, reviewing, and controlling are also important managerial tasks, organizing specifically focuses on structuring the work relationships and creating the framework for the organization to function effectively.
What is Origination?
In finance, origination refers to the process of creating a new loan or other financial product. It involves gathering information about the borrower, evaluating their creditworthiness and ability to repay, and establishing the terms and conditions of the loan or financial product.
Origination can also refer to the process of issuing a new security, such as a bond or stock, in the capital markets. In this case, the process involves underwriting, which is the process of evaluating the risks and setting the price of the security to be issued.
Organizing involves designing the structure of the organization and creating systems and processes to facilitate the coordination and collaboration of employees towards the achievement of the organization's goals. This includes defining roles and responsibilities, establishing reporting relationships, allocating resources, and creating communication channels.
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The following are affected by the business structure you choose when you start your
business.
O a.
day-to-day operations, personal liability, and business name.
O b.
day-to-day operations, business location, and taxes.
О с.
profitability, personal liability, and taxes
O d.
day-to-day operations, personal liability, and taxes.
1
Answers
When you start business, the business structure you choose can affect your day-to-day operations, personal liability, and taxes.
What is a liability?Liability refers to the legal responsibility for one's actions or debts. It is an obligation to pay or perform something to another party. Liability can arise from various sources, such as contractual agreements, statutory laws, or common law. For instance, when a person borrows money from a bank, they have a liability to repay the loan amount to the bank within a certain period, according to the terms and conditions of the loan agreement. Liability can also arise from a person's actions or omissions that result in harm or damage to others. In such cases, the person may be held liable for the damages caused and may have to compensate the affected parties for their losses.
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Question 6(Multiple Choice Worth 4 points)
(02.08 LC)
Which type of professional would help the government determine where to set the price of oranges for U.S. markets?
O Consumers
O Economists
O Exporters
Importers
Answers
Answer:
Explanation:
Economists
a stock has a correlation with the market of 0.61. the standard deviation of the market is 30%, and the standard deviation of the stock is 31%. what is the stock's beta?
Answers
a stock has a correlation with the market of 0.61. the standard deviation of the market is 30%, and the standard deviation of the stock is 31%. the stock's beta is 0.63.
In arithmetic and data, the deviation is a measure of the difference between the observed fee of a variable and a few other costs, often that variables suggest. The signal of the deviation reports the route of that difference (the deviation is high-quality whilst the determined cost exceeds the reference value). The importance of the value indicates the scale of the distinction. A deviation that may be a distinction between a found fee and the true price of an amount hobby (where genuine price denotes the anticipated cost, along with the population mean) is an error. A deviation that is the distinction between the determined value and an estimate of the real cost (e.G. The sample suggest; the expected value of a pattern can be used as an estimate of the anticipated price of the population) is a residual. These ideas are relevant to facts in the c programming language and ratio tiers of dimension.
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A whole supermarket shelf of snack food bags is marked, "Frito-Lay." This is an example of a(n)
brand.
a. co brand
b. individual
c private
d. wholesale
e. family
Answers
designing an affordable, energy-efficient car in the next four years is a:
Answers
Long term goals depict goal which involves plan to achieve an action in years to come.
Goals simply refers to an objective or target an individual or firm plans to achieve or attain.
Basically, a long-term goal refers to goal one;s wants to accomplish in the future and not in present.Some examples of Long-term goals are
Setting a goal of obtain PHD.Goals on becoming one's boss.Publication of book.In conclusion, the plan of designing a car in the next four years is an example of long-term goals.
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Write one paragraph about SOMEONE YOU LOVE SPENDING TIME WITH.
Answers
MUMY GIVE ME FIVE SARS
Which statement about the Federal Reserve (the Fed) is true?
O Unless a person works there, the Fed has little impact on everyday life.
O The Fed determines the criteria banks must use to evaluate loan requests.
O The Fed sets monetary policy, which affects the interest rates banks offer.
O Because it is independent, the Fed reviews and approves the national budget.
Answers
A statement that is true on the Federal Reserve is that C. The Fed sets monetary policy, which affects the interest rates banks offer.
What does the Federal Reserve do ?The American central bank is known as the Federal Reserve System (FRS). It is conceivably the most potent financial organization in the entire globe and is sometimes referred to as "the Fed." It was established to give the nation a secure, adaptable, and stable financial and monetary system.
Its primary duties include controlling the money supply, establishing interest rates, and overseeing the financial system. In times of economic crisis, it also serves as a lender of last resort, as was shown during the financial crisis of 2008.
These powers of the Federal Reserve mean that it is the one which sets the monetary policy of the United States. This monetary policy will then affect the interest rates on loans, offered by banks.
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the ratio is computed by taking market price per common share divided by earnings per share. is it True or False?
Answers
The statement is true because the ratio referred to in the statement is the price-to-earnings (P/E) ratio, which is calculated by dividing the market price per common share by the earnings per share (EPS).
This ratio is commonly used as a valuation metric by investors to determine the relative value of a company's stock. A high P/E ratio may indicate that the market has high expectations for the company's future earnings growth, while a low P/E ratio may indicate that the market has low expectations for future earnings growth.
It's important to note that the P/E ratio is just one of many valuation metrics used by investors and should not be relied upon solely when making investment decisions.
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all of the following are common reasons why small-business ventures fail except a. operational mediocrity. b. fear of firing. c. sloppy accounting. d. long-term focus. e. poor management.
Answers
All of the following are common reasons why small-business ventures fail except Long-term focus. Option (d) is correct.
Business founders claim that reasons for failure include running out of money, being in the wrong market, lacking research, poor alliances, inefficient marketing, and lacking industry expertise. Setting goals, conducting correct research, enjoying your work, and staying the course are all ways to succeed.
A successful firm is built on a strong and practical business plan. You will describe your business's realistic goals, how it can achieve them, potential issues, and remedies in the plan. Through research and surveys, the strategy will determine whether there is a need for the business.
Therefore, Option (d) is correct.
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If you are at a university and someone asks "what's your MAJOR?" this is what they
want to know:
a) the secondary courses you are taking in college just for fun
b) the academic discipline to which you have formally committed so you can earn
an undergraduate degree
c) which credit cards you have maxed out to afford tuition, housing, food and books
d) which political party you will agree to join and promote on your campus
Answers
Answer:
the answer is B
Explanation:
Describe at least two capital investments that would increase growth for your business. In other words, how might you expand the frontier of your production possibilities curve? Explain how your capital investments would help, and classify each investment by category: facilities, equipment, labor, marketing, or expansion. (Business would be making baked goods and drawings.
Answers
While the second would fall under marketing. Other potential capital investments for a business like this might include expanding facilities (such as renting a larger kitchen or office space), hiring additional labor to increase production, or expanding the product line to include new baked goods or artwork.
What is Capital Investment?
Capital investment refers to the purchase of long-term assets or investments that are expected to provide benefits for the company over a prolonged period. These investments are intended to generate income or increase productivity and efficiency, rather than be used for immediate consumption.
Online Marketing Campaign (Marketing): Another way to expand the business could be to invest in an online marketing campaign. This might involve hiring a marketing consultant to develop a social media strategy or creating targeted ads to reach a wider audience.
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The ____ is a multiple choice examination that evaluates the skills of the applicants for enlistment in the US military.
Answers
The Armed Services Vocational Aptitude Battery (ASVAB) is a multiple-choice examination that evaluates the skills of the applicants for enlistment in the US military.
This is further explained below.
What is the Armed Services Vocational Aptitude Battery (ASVAB)?Generally, The Armed Services Vocational Aptitude Battery (ASVAB) is a multiple-choice test that assesses applicants' skills for enrollment in the United States military.
In conclusion, The United States Military Entrance Processing Command uses the Armed Services Vocational Aptitude Battery (ASVAB), a multiple-choice exam, to screen applicants for possible service in the armed forces.
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the phase of the business cycle in which real gdp declines is called: group of answer choices a recession. the trough. an expansion. the peak.
Answers
The correct answer is "a recession." The phase of the business cycle in which real GDP declines is referred to as a recession.
During a recession, economic activity contracts, leading to a decrease in output, employment, and income. It is characterized by a sustained period of economic decline and is typically accompanied by factors such as reduced consumer spending, decreased investment, and a slowdown in business activity. The opposite phase, in which real GDP increases, is called an expansion. The trough represents the lowest point of the recession, while the peak is the highest point of the expansion.
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in the short run, when a firm produces zero output, total cost equals: group of answer choices marginal cost zero fixed cost average total cost
Answers
In the short run, when a firm produces zero output, total cost equals fixed cost.
The cost of producing goods is determined by the amount of labor and physical capital used.
The total cost is the product of the fixed and variable costs.
Total cost = fixed cost + variable cost.
Fixed cost is constant and it is not a function of units produced, whereas variable cost is determined by the number of units produced.
Therefore, only the variable cost will be reduced to zero when the output is zero. The fixed cost will not change. As a result, the overall cost will equal the fixed cost.
Fixed costs are expenses that do not vary with production level, at least not in the short term. The fixed costs are the same whether you produce a lot or a little. Rent on a factory or retail space is one example. Once you sign the lease, regardless of how much you produce, the rent remains the same until the contract expires.
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Discuss the advantages and disadvantages of the division of labour.
Answers
Explanation:
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If you tell me a good counter to this argument fast, I'll give u brainliest + five star (HELP)
If a school duration is not year-round, then students will most likely forget alot of things they learned over school year.
Answers
We certainly blank out things over time, and there's no reason to evaluate that what students learn in school should be an exception.
What do you mean by Argument?Making an argument involves two or more individuals reacting to one another's claim and support for such a claim.
There are a few unusual reasons why the brain forgets, but the two main causes are decay and disuse. Decay is a natural process that refers to the gradual loss of information over time. When we first learn something, it is stored in our short-term memory, which is relatively small and can only hold a very small amount of information.
Therefore, The statement “If a school duration is not year-round, then students will most likely forget a lot of things they learned over the school year.” is correct.
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I
In which book of original entry would you enter the following?
(a) Sales invoice
(b) Debit note-
(c) Cash sale-
(d) Purchase invoice-
(e) Credit note-
Answers
YASHARI earns $27,000 per year, is single, and lives in Wyoming. She has $7000 in Direct Subsidized loans and another $19,000 in Direct Unsubsidized loans. She is trying to save up an emergency fund of at least 6 months’ take-home pay, so she’s torn about how much she should devote to her student loans and how much to the emergency fund every month.
- Which plan has the highest total amount paid? How long is the repayment period for this plan?
Answers
a) The plan with the highest total amount paid is the Direct Unsubsidized Loan of $19,000 because, in addition to the interest, the principal amount is higher than the Direct Subsidized Loan.
b) The repayment period for the Direct Unsubsidized Loan is 10 years after graduation if the Standard Repayment Plan is chosen.
What are unsubsidized and subsidized loans?Subsidized Loans are student loans subsidized by the Federal Government, especially with respect to the interest payment.
Subsidized Loans do not accrue interest during school at least half-time or during deferment periods. They are available for undergraduate and graduate students in financial need.
Unsubsidized Loans are federal student loans for both undergraduate and graduate students that are not based on financial need. They accumulate interest during school if the student does not elect to make monthly interest payments.
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