The total market value of the common stock of the Okefenokee Real Estate Company is $6 million, and the total value of its debt is $4 million. The treasurer estimates that the beta of the stock is currently 1.5 and that the expected risk premium on the market is 6%. The Treasury bill rate is 4%. Assume for simplicity that Okefenokee debt is risk-free and the company does not pay tax.
Total Market Value Total Debt Value Beta Risk Premium T-Bill Rate Risk Free Rate Tax Rate
Okefenokee Real Estate Company 6 million 4 million 1.5 6% 4% 0 0

a. What is the required return on Okefenokee stock?
b. Estimate the company cost of capital.
c. What is the discount rate for an expansion of the companyââ?¬â?¢s present business?
d. Suppose the company wants to diversify into the manufacture of rose-colored spectacles. The beta of unleveraged optical manufacturers is 1.2. Estimate the required return on Okefenokeeââ?¬â?¢s new venture.
See attached and provide assistance to problems 9-11 and 10-9

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The total market value of the common stock of the Okefenokee Real Estate Company is $6 million, and the total value of its debt is $4 million. The treasurer estimates that the beta of the stock is currently 1.5 and that the expected risk premium on the market is 6%. The Treasury bill rate is 4%. Assume for simplicity that Okefenokee debt is risk-free and the company does not pay tax.
Total ...

Assuming that their NPVs based on the firm's cost of capital are equal, the NPV of a project whose cash flows accrue relatively rapidly will be more sensitive to changes in the discountrate than the NPV of a project whose cash flows come in later in it's life
True or false

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a) If the discountrate is zero, what is the NPV?
b) If the discountrate is infinity, what is the NPV?
c) What is the IRR on the investment?
d) Based on th

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(Please see the attached file for the complete problem explanation)
There are 8 projects and there are two questions that must be asked of all of them:
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b. What is the IRR of the investment?
c. What is the payback period on this investment?
Show your work.

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0 1 2 3 4
| | | | |
S -$1,000 $900 $250 $10 $10
L -$1,000 $0 $250 $400 $800
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a. What is the NPV of the investment when the cost of capital is 8 percent? 10?
b. What is the IRR of the investment?
c. What is the payback period on this investment?