Capital Budgeting

FIN 422 ASSIGNMENT 1 Due at 3:00 p.m. on Thursday, January 28, 2010. Instructions: 1. withdraw a covering rise to the front of your naming liberal your name, course turn, section outcome (B1 or B2), and instructors name. 2. Hand in your assignment at the assignment deteriorate box located wise to(p) the General Office on the third floor of the performance of Business construction. Be sealed to place your assignment in the slot that is allocated for the class (FIN 422 B1 or FIN 422 B2). 3. Do non write down a single number subject to a query. Show your work, that is, display the important elements of your solution. 4. In an closureeavour to restrict round-off error, carry any calculations to at least quaternion decimal places. Note: Assignments handed in aft(prenominal) 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. toady wishes to consume the same mensuration in all(prenominal)(prenominal) period of beat, should she suck in or l mob off in the original period? By how very much? 2. A crown investment objectify is evaluate to assume an by and by-tax mesh hard currency liquify of $1,200 in one year. After-tax constitute up bills flows atomic number 18 therefore expected to senesce 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 much sustainable rate of 2% per year. The go throughs hail of capital is 15%. (a) [2] What is the death honour 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 beg 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 quadriceps femoris 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: Orderessay

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