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Various questions in financial management

Please review and let me know what I've done wrong. I really need help with question 19.

(See attached file for full problem description)

14 Your grandfather placed $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the interest rate on the trust fund?

15 Calculate the NPV of the following project using a discount rate of 12%
16 What is the NPV of a project that is expected to pay $10,000 a year for 7 years if the initial investment is $40,000 and the required return is 15%?

17 What is the IRR of an investment that costs $77,000 and pays $27,500 a year for 4 years?
18 RDJ Manufacturing has 300 million shares of stock outstanding at the end of 2000. During 2000, the company reported net income of $600 million, retained earnings of $ 900 million, and $240 million in dividends paid. What is RDJ's earnings per share?

19 An unlevered firm with a market value of $ 1 million has 50,000 shares outstanding. The firm restructures itself by issuing 200 new par bonds with face value of $1,000 and an 8% coupon. The firm uses the proceeds to repurchase outstanding stock. In considering the newly levered versus formerly unlevered firm, what is the breakeven EBIT? Ignore taxes.

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Solution Summary

The solution has various questions relating to time value of money, NPV, IRR and breakeven EBIT

$2.19