Purchase Solution

Finance: Project evaluation

Not what you're looking for?

Ask Custom Question

1. Ballack Inc. is a 100% equity-financed company (no debt or preferred stock). Its WACC equals its costs of common equity, their retained earnings will be sufficient to fund its capital budget in the foreseeable future. Their beta of 1.4 the risk-free rate of 6.0% and the market premium is 5.5%. What is their WACC?

2. They are considering the following projects for next year:

Project Requires investment Expected rate of return
W $1,000 13.65%
X $2,000 14.10%
Y $3,000 13.10%
Z $4,000 14.60%

Each project has average risk, they accept any project whose expected rate of return exceed its cost of capital. How large should next years capital budget be?

Purchase this Solution
Solution Summary

The problem set deals with capital budgeting: determining appropriate investments to make.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
Recent Feedback
  • "Thank you."
  • "thank you Chidi Ngene.. if you have any APA references would be great"
  • "Thank you so much for your help, your explanations were easy to understand and apply!"
  • "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
  • "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • Project Evaluation / Merger Gains

    The solution explains two finance questions relating to project evaluation and merger gains

  • Accounting: Capital budgeting.

    (b) Compute the net present value of each project. Does your evaluation change? (Round to nearest dollar.) The solution is presented in a Word document. The solution would be useful to accounting and finance student. Thank you.

  • Net Present Value, Return on Investment, and Profitability Index

    Please find guidelines and ideas for Evaluation of Finance Project in the attached file.

  • Finance problem: Project evaluation

    (4) in finance, there are some measures available to define the riskiness of a project.

  • Evaluation of project proposal

    168220 Evaluation of project proposal Please see attachment. You are in the finance department of a firm and you are evaluation a project proposal. You have the developed the following financial projections and you are calculating: a.

  • Functional area of finance

    Finance is also responsible to help evaluate the project in terms of the ultimate returns received from the cash flows generated by the project --- cash flow is the primary measurement of success of a long term project --- not profit.

  • 10 Business Finance Questions

    102810 10 Business Finance Questions 1. Which of the following project evaluation techniques does not take into consideration the time value of money: a. NPV b. IRR c. PI d. Payback 2.

  • Operating vs. Financial Leverage

    The importance of assessing operating vs. financial leverage is that operating leverage has important implications for project evaluation, whereas financial leverage may not.

  • Scheduling and Project Management (PERT and CRM)

    407878 Scheduling and Project Management (PERT and CRM) Discuss how project management influences other departments and functions of this organization (i.e., marketing, finance, accounting, human resources, etc.)?

  • Solution plan for construction issue

    Finance Yes Re-negotiation with contractor would entail some financial spill over for the company Accounting Yes Accounting for the period (till the completion of project) would change with additional process of mediation Legal & Ethical issues Yes

View More Related Solutions