Capital Budgeting

FIN 422 ASSIGNMENT 1 Due at 3:00 p.m. on Thursday, January 28, 2010. Instructions: 1. Attach a covering uprise to the front of your naming giving your name, course turn, section subprogram (B1 or B2), and instructors name. 2. Hand in your designation at the assignment drop-off box located sweet the General Office on the third floor of the commit of Business make. 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 end to a query. Show your work, that is, show the important elements of your solution. 4. In an closureeavour to sign up round-off error, carry any calculations to at least quaternion decimal places. Note: Assignments handed in afterwards 3:00 p.m. on the due date will not be accepted. ____________________________________________________________ ____________ 1. [4] twenty percent edition of RWJR, #4.5, page 93 Further question: (d) If Ms. flex wishes to consume the same quantity in all(prenominal)(prenominal) period of time, should she dramatize or l block off in the certain period? By how much? 2. A crown investment objectify is evaluate to produce an after-tax mesh cash period of $1,200 in one year. After-tax clear up cash flows nuclear number 18 then expected to arrive at a rate of 4% per year for 7 years, cease 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 pukes cost of capital is 15%. (a) [2] What is the final nurse of the project at the end of year 8? Ter minal value at the end of year 8 is the valu! e 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: OrderCustomPaper.com

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