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Thank you so much!!! Could you also answer the thr...

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Thank you so much!!! Could you also answer the three I've listed below and that is it. Thank you again!! 1. Liberty Lugnuts has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average projects at 10%, and high-risk projects at 12%. The company is considering the following projects: Project Riskiness Expected Return A High 15% B Average 12% C High 11% D Low 9% E Low 6% Which set of projects would maximize shareholder wealth? Answer A and B A, B, and C A, B, and D 2. Van Auken Inc. is considering a project that has the following cash flows: Year Cash Flow 0 -$1,000 1 400 2 300 3 500 4 400 The company?s WACC is 10%. What are the project?s payback, internal rate of return, and net present value? Answer Payback = 2.4, IRR = 21.22%, NPV = $260 Payback = 2.6, IRR = 24.12%, NPV = $300 Payback = 2.6, IRR = 21.22%, NPV = $300 Payback = 2.6, IRR = 21.22%, NPV = $260 3. Sadik Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? WACC: 8.00% 0 1 2 3 4 CFS -$1,050 $675 $650 CFL -$1,050 $360 $360 $360 $360 Answer $10.10 $9.09 $12.22 #13.44 A, B, C, and D

 

Paper#5460 | Written in 18-Jul-2015

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