Purchase Solution

Project's NPV of an All Equity Firm

Not what you're looking for?

Ask Custom Question

70. An all equity firm is analyzing a potential project which will require an initial aftertax cash outlay of 50K and after tax cash inflows of 6K per year for 10 years. In addition, this project will have an after tax salvage value of 10K at the end of Year 10. If the risk free rte is 6 % the return on an averge stock is 10 % and the beta of this project is 1.50, then what is the project's NPV?

13210
4905
7121
-6158
-12,879

Purchase this Solution
Solution Summary

This discusses Project's NPV of an all equity firm.

Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

View More Free Quizzes
Related BrainMass Solutions

  • APV, Unlevered cost of capital, Debt=equity ratio

    a. 8.83% b. 12.30% c. 13.97% d. 14.08% e. 14.60% Your firm has a pre-tax cost of debt of 7% and an unlevered cost of capital of 13%. Your tax rate is 35% and your cost of equity is 15.26%. What is your debt-equity ratio?

  • NPV

    The project's beta is 2, the market portfolio's mean rate of return is E(Rm) = 15%, and the riskless interest rate, r, is 4%. The firm is an all-equity firm. Should the firm accept the project? What is the project's NPV?

  • Multiple Choice questions - finance

    It can be more than one statement: -All else equal, a project's IRR increases as the cost of capital declines -All else equal, a project's NPV increases as the cost of capital declines -All else equal, a project's MIRR is unaffected by changes in the

  • Finance questions

    An increase in the personal tax rate would not affect firms' capital structure decisions. A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.

  • Finance Questions

    What's the firm's cost of equity capital? 4) A firm has an equity multiplier of 3.71. The firm's assets are financed with some combination of common equity and long-term debt. What's the firm's debt ratio?

  • International Finance, Cost of Capital

    A firm with a corporate wide debt/equity ratio of 1:2, an after tax cost of debt of 7 percent, and a cost of equity capital of 15 percent is interested in pursuing a foreign project.

  • Corporate Finance: Cost of Common Equity / Equity Capital; NPV Technique; Capital Budgeting

    15962 Corporate Finance: Cost of Common Equity / Equity Capital; NPV Technique; Capital Budgeting **Please see attachment for multiple choice options. 1. For a typical firm with a given capital structure, which of the following is correct?

  • Free Cash Flows and Unlevered Equity

    Without is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. With has 2 million shares outstanding and $12 million dollars in debt at an interest rate of 5%.

  • Project NPV Evaluation

    This investment requires an initial outlay of $90,000 and will generate net cash inflows of $16,000 per year for 8 years. a. What is the project's NPV using the discount rate of 11%? Should the project be accepted? Why or why not? b.

View More Related Solutions