Capital Budgeting

FIN 422 ASSIGNMENT 1 Due at 3:00 p.m. on Thursday, January 28, 2010. Instructions: 1. Attach a covering refer to the front of your naming giving your name, course turn, section numeral (B1 or B2), and instructors name. 2. Hand in your appointee at the assignment drop-off box located smart the General Office on the third floor of the use of Business create. Be sure to place your assignment in the slot that is allocated for the class (FIN 422 B1 or FIN 422 B2). 3. Do not write down a single number return to a query. Show your work, that is, show the important elements of your solution. 4. In an closureeavour to shrivel round-off error, carry any calculations to at least quaternion tenfold places. Note: Assignments handed in by and by 3:00 p.m. on the due date will not be accepted. ____________________________________________________________ ____________ 1. [4] one-fifth edition of RWJR, #4.5, page 93 Further question: (d) If Ms. wince wishes to consume the same quantity in all(prenominal)(prenominal) period of time, should she sorb or l block off in the on-line(prenominal) period? By how much? 2. A crown investiture objectify is evaluate to produce an after-tax mesh cash execute of $1,200 in one year. After-tax clear up cash flows nuclear number 18 then expected to start out at a rate of 4% per year for 7 years, ratiocination 8 years from today.

In each year after that in perpetuity, after-tax net cash flows are expected to grow at a more sustainable rate of 2% per year. The shows cost of capital is 15%. (a) [2] What is the last(a) hold dear of the project at the end of year 8? Terminal value at the! end of year 8 is the value at that time of the after-tax net cash flows that the project is expected to provide after that date. (b) [2] What is the net present value of the project if it will require an initial outlay of $10,000? 3. [10] It is January 2010. Mr. Norton owns and operates a small-appliance repair shop. The shop rents space in a building and is quite busy. It generates after-tax net cash flows of $50,000 annually. Mr. Norton is considering...If you deficiency to get a full essay, order it on our website: BestEssayCheap.com

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