A 5-year project will require an investment of $100 million. this comprises of plant andmachinery worth $80 million and a net working capital of $20 million. the entire outlay willbe incurred at the project’s commencement.financing for the project has been arranged as follows:80,000 new common shares are issued, the market price of which is $500 per share. theseshares will offer a dividend of $4 per share in year 1, which is expected to grow at a rate of 9%per year for an indefinite tenure.remaining funds are borrowed by issuing 5-year, 9% semi-annual bonds, each bond having aface value of $1,000. these bonds now have a market value of $1,150 each.at the end of 5 years, fixed assets will fetch a net salvage value of $30 million, whereas the networking capital will be liquidated at its book value.the project is expected to increase revenues of the firm by $120 million per year. expenses,other than depreciation, interest and tax, will amount to $80 million per year. the firm is subjectto a tax rate of 30%plant and machinery will be depreciated at the rate of 25% per year as per the written-downvalue method.you are required to:1. compute the cost of equity for this project (2 marks)2. compute the relevant cost of debt for this project. (2 marks)3. compute the wacc (4 marks)4. determine the initial cash flow for the project. (1 mark)5. determine the earnings before taxes for years 1 through 5 (2 marks)6. compute the ocf for years 1 through 5 (3 marks)

Answers

Answer 1

Answer:

1. The cost of equity can be derived from the share price, which is the present value of the expected dividend one year from now(using the present value of growing perpetuity) as shown below:

share price=D1/(r-g)

share price=$500

D1=expected dividend one year from now=$4

r=cost of equity=unknown

g=constant growth rate=9%

$500=$4/(r-9%)

$500*(r-9%)=$4

r-9%=$4/$500

r=($4/$500)+9%

r=9.8

the Cost of Equity for the project is 9.8%

2. Compute the relevant cost of debt for this project is 5.53%

Market Value= 1,150

Face Value= 1,000

Term= 5 years, 10 semi-annual periods

Coupon Rate= 9%, 4.5% semi-annual rate

Tax Rate= 30%

N=10(semiannual coupons in 5 years)

PMT=45(semiannual coupon=face value*coupon rate/2=$1000*9%/2=$45)

PV=-1150(current market price)

FV=1000(face value of the bond is $1,000)

CPT(press compute)

I/Y=2.762766%(semiannual yield)

annual yield=2.762766%*2

annual yield=5.53%

3. The weighted average cost of capital is the sum of equity and the after-tax cost of debt multiplied by their respective market value weights

WACC=(cost of equity*weight of equity)+(after-tax cost of debt*weight of debt)

cost of equity=9.80%

the market value of equity raised=shares issued*market price of the share

the market value of equity raised=80,000*$500

the market value of equity raised=$40 million

weight of equity=market value of equity/total amount raised

weight of equity=$40 million/$100 million

weight of equity=40.00%

weight of debt=1-weight of equity

weight of debt=1-40.00%

weight of debt=60.00%

after-tax cost of debt=bond yield*(1-tax rate)

the after-tax cost of debt=5.53%*(1-30% )

the after-tax cost of debt=3.87%

WACC=(9.80%*40.00%)+(3.87%*60.00%)

WACC= 6.2426% or 6.24%

Therefore the WACC is 6.2426% or 6.24% rounded off to 2decimal place

4. Determine the initial cash flow for the project =$100 million

The initial cash outlay is the sum of the plant and machinery and net working capital investment required to commence the project

Plant and machinery= $80 million

Networking capital = $20 million

Total Initial Cash Flow= $100 million

5. Determine the earnings before taxes for years 1 through 5

Year

1 2 3 4 5

Revenue

120,000,000 120,000,000 120,000,000 120,000,000 120,000,000

Expenses

(80,000,000) (80,000,000) (80,000,000) (80,000,000) (80,000,000)

Depreciation (20,000,000) (15,000,000) (11,250,000) (8,437,500) (6,328,125)

EBT

20,000,000 25,000,000 28,750,000 31,562,500 33,671,875

Step-by-step explanation:

5. Depreciation schedule:

Year 1 = 80 × 25% = 20

Year 2 = (80-20) × 25% = 15

Year 3 = (80-20-15) × 25% = 11.25

Year 4 = (80-20-15-11.25) × 25% = 8.4375

Year 5 = (80-20-15-11.25-8.4375) × 25% = 6.328125

EBT = revenue - Expenses - depreciation

Year 1 = 120 - 80 - 20 = 20 Million

Year 2 = 120-80- 15 = 25 Million

Year 3 = 120-80- 11.25 = 28.75 Million

Year 4 = 120-80- 8.4375 = 31.5625 Million

Year 5 = 120-80- 6.328125 = 33.671875Million

Answer 2

The cost of equity of the project through the use of Gordan's formula will be 9.87%.

How to compute the cost of equity?

It should be noted that the price of stock is computed thus:

= Previous dividend + Growth / Cost of equity - Growth

Po = Do + g/Ke - g

500 = 4 + 9%/Ke - 9%

500 = 4 + (0.09 × 4) / Ke - 9%

500 = 4.36/Ke - 9%

500(Ke - 9%) = 4.36

500Ke = 4.36 + 45

500Ke = 49.36

Ke = 49.36/500

Ke = 9.87%

The cost of debt will be:

= Interest rate (1 - Tax rate)

= 9% × (1 - 30%)

= 9% × 0.7

= 6.30%

The amount of the cost of debt will be:

= $1000 × 6.30%

= $63.00

Learn more about cost of equity on:

https://brainly.com/question/14041475


Related Questions

Help please… thank you!

Answers

Answer:

B

Step-by-step explanation:

5 × pi ÷12 = 75 degrees

this is essentially cos75

= cos(30 + 45)

then we use the identities to solve.

the answer will = to 0.2588

Factored form;
f(x) = (x ^ 2 - 4)(x ^ 2 + 4x + 3)

Answers

The expression f(x) = (x ^ 2 - 4)(x ^ 2 + 4x + 3 is a polynomial function

The factored form of f(x) = (x ^ 2 - 4)(x ^ 2 + 4x + 3) is f(x) = (x - 2)(x + 2)(x + 3)(x + 1)

How to determine the factored form?

The expression is given as:

f(x) = (x ^ 2 - 4)(x ^ 2 + 4x + 3)

Express as difference of two squares

f(x) = (x - 2)(x + 2)(x ^ 2 + 4x + 3)

Expand

f(x) = (x - 2)(x + 2)(x ^ 2 + x + 3x + 3)

Factorize the expression

f(x) = (x - 2)(x + 2)(x(x + 1) + 3(x + 1))

Factor out x + 1

f(x) = (x - 2)(x + 2)(x + 3)(x + 1)

Hence, the factored form of f(x) = (x ^ 2 - 4)(x ^ 2 + 4x + 3) is f(x) = (x - 2)(x + 2)(x + 3)(x + 1)

Read more about factored expressions at:

https://brainly.com/question/723406

Alicia tiene un reloj que se retrasa 3 segundos cada día. ¿Cuántos minutos y segundos se retrasa en un mes?
¿Y en un año?

Answers

En un mes el reloj de Alicia se retrasa 1.5 minutos, por otra parte en un año su reloj se retrasa 18 minutos y 15 segundos.

¿Cuánto se retrasa el reloj en un mes?

La mayoría de los meses tienen entre 30 y 31 días:

Mes de 30 días:

3 segundos x 30 = 90 segundos / 60 segundos = 1 minuto y 30 segundos3 segundos x 31= 91 segundos/ 60 segundos = 1 minuto y 31 segundos

En general se atrasa 1.5 minutos en un mes.

¿Cuánto se retrasa el reloj en un año?3 segundos x 365 días = 1095 segundos/ 60 segundos = 18 minutos y 15 segundos.

Aprenda más sobre el reloj en: https://brainly.com/question/8776916

#SPJ1

Tayshawn is going to spend 35% of his money on a gift for his mother. If the gift costs $42 how much money does Tayshawn have


6th grade

Answers

well, he has "x", which oddly enough is 100%, and we also know that 42 is 35% of that, so

[tex]\begin{array}{ccll} amount&\%\\ \cline{1-2} x & 100\\ 42& 35 \end{array} \implies \cfrac{x}{42}=\cfrac{100}{35}\implies \cfrac{x}{42}=\cfrac{20}{7} \\\\\\ 7x=840\implies x=\cfrac{840}{7}\implies x=120[/tex]

I need the answer to this please

Answers

Answer:  the answer is D, if you just graph it in the Desmos graphing calculator you can solve it easily

Unit 6: Radical Functions

Homework 3: Add/Subtract/Multiply Radicals
Show your work!

4. [tex]5\sqrt[3]{32x^3y^4}-3xy^3\sqrt{4y[/tex]

5. [tex]15\sqrt{2}*-2\sqrt{20}[/tex]

6. [tex]4^{3}\sqrt{-9}*7^3\sqrt{48}[/tex]

7. [tex]3\sqrt{18w^7}*10\sqrt{4w^9}[/tex]

Answers

Answer:

See below ↓↓↓↓

Step-by-step explanation:

4.

[5∛32x³y⁴] - [3xy³√4y][5*2*x*y ∛4y] - [3xy³*2 √y]10xy∛4y - 6xy³√y2xy [5∛4y - 3y²√y]

5.

15√2 * -2√20-30√40-30*2√10-60√10

6.

4³√-9 * 7³√484³*3√-1 * 7³*4√3263424√-3263424i√3 [i is the complex number for √-1]

7.

[tex]3\sqrt{18w^{7} } *10\sqrt{4w^{9} }[/tex]30√72w¹⁶30*6*w⁸√2180w⁸√2

Which list shows the decimals ordered from least to greatest?

0.31, 0.68, 0.16
0.39, 0.49, 0.35
0.42, 0.47, 0.46
0.19, 0.23, 0.28

Answers

Answer:

0.19, 0.23, 0.28...............

0.19, 0.23, 0.28

The easiest way to do this is to ignore the decimal and but it in order from least to greatest

Complete the net worth statement by determining the total assets and total liabilities.What is the net worth? A 178,000 B 180,338 C 1,052,662 D 1,233,000

Answers

The total liabilities is $180,338

The total assets is  $1,233,000

The net worth is $1,052,662

What is the net worth, assets and liabilities?

Net worth is total assets less liabilities. Assets is the sum of liquid assets and non liquid assets. Liabilities is the sum of car loan and mortgage loan.

Assets = 178,000 + 1,055,000 = $1,233,000

Liabilities = 145,908 + 34,430 = $180,338

Net worth =  $1,233,000 - $180,338 = $1,052,662

To learn more about net worth, please check: https://brainly.com/question/27110299

What is the length of the hypotenuse in the right
triangle?
O 2,593 cm
O 60 cm
14,225 cm
O 65 cm

Answers

Answer:

sqrt(2593)

Step-by-step explanation:

17^2+48^2 = 2593^2

how do i find the vertex of y= -4x^2-16x+1 ?

Answers

Answer:

(-2, 17)

Step-by-step explanation:

the first step you can do to find the vertex is to find the axis of symmetry

the equation for that is -b/2a

-(16) / 2(-4)

-16 / 8 = -2

the axis of symmetry is x =-2 so you plug in -2 to the equation

-4(-2)^2 - 16(-2) + 1

-4(4) + 32 + 1

-16 + 33

17

the vertex is (-2, 17)

Please help me. I will make Brainliest

Answers

i believe the correct answer is D

5 people are evenly sharing 12 kilograms of apples.
How many kilograms of apples should each person get?
Choose 1 answer:
A. 5/12 kilograms of apples
B. 2 10/5 kilograms of apples
C. 12/5 kilograms of apples
D. 1 2/5 kilograms of apples

Answers

The answer is 5/12 kilograms of apples which is A

Answer:

C. 12/5 kilograms of apples

Step-by-step explanation:

If 5ppl =12kg of apples

then 1 person= ?kg of apples

If more less divides and if less more divides

Therefore

1×12

5

= 12

5

Which sequence of transformations shows that Figure A is similar to Figure B?



Rotate Figure A 180º about the origin, then dilate it with the center at the origin and a scale factor of 2.

Rotate Figure A 90º about the origin, then dilate it with the center at the origin and a scale factor of 2.

Reflect Figure A across the y-axis, then dilate it with the center at the origin and a scale factor of 12.

Dilate Figure A with the center at the origin and a scale factor of 2, then translate it to the left 4 units.

Answers

Answer:

That would be the second option:  Rotate Figure A 90º about the origin, then dilate it with the center at the origin and a scale factor of 2.

-yOuR nEiGhbOrhOoD cLEaNeR ;)

Members of a softball team raised $1319.25 to go to a tournament. They rented a bus for $776.50 and budgeted $41.75 per player for meals. Write and solve an equation which can be used to determine pp, the number of players the team can bring to the tournament.

Answers

Answer:

13 players

Step-by-step explanation:

Money Raised=RentedBus+Meals

1319.25=776.50+41.75p (p is for the number of players)(Now we solve for x)

Subtract 776.50 from both sides:   542.75=41.75x

Divide both sides by 41.75:   13=x

Remember that x is for the number of players so there'll be 13 players going to the tournament.

50 POINTS FOR QUESTION 24 thank u!!

Answers

Answer:

Each instalment = £27.45

Step-by-step explanation:

Given:

Price of work trolley = £59.90Deposit = £5

Remaining balance to be paid = Price of work trolley - deposit

                                                   = £59.90 - £5

                                                   = £54.90

If the remaining balance is to be paid in 2 instalments:

Cost of each instalment = remaining balance ÷ 2

                                        = £54.90 ÷ 2

                                        = £27.45

Please answer this with an explanation

Answers

Answer:

64   <====  I don't see the correct answer listed

Step-by-step explanation:

Max will occur in month x given by  - b/2a =  - 32/ (2 * -16) = 1

  plug this 'x'  month in to find the max value v

=  64

someone help me please

Answers

Answer:

b

Step-by-step explanation:

the x has been cubed meaning

X * X *X = x^3

X^3 has been added to 5

C is saying they multiplied three to x therefore being

B

A triangular garden has it sides 45m,40m and 50m . Then, find the cost of fencing it's boundary at the rate of Rs.60 per meter.​

Answers

we should find perimeter.

45+40+50=135m.

then, we should multiply 135 and rate of per meter.

135×60=8100Rs.

-2 1/5 (10x - 4.4) - 0.32

Answers

−42x+ 18.16

I think !!

Find measure of the angle UTW

Answers

Answer:

57°

Step-by-step explanation:

Using the Law of sines,

[tex]\frac{sin57}{WT} = \frac{sinx}{UT}[/tex]But, WT = UT [both are radii of the circle]⇒ sin 57° = sin x°⇒ x° = ∠UTW = 57°

PLEASE HELP !!!!!!??

Answers

Answer:

( 1, 35 )

Step-by-step explanation:

y=mx+c

c= y-intercept ( where the graph line crosses the cross line)

c=0

mx = gradient ( rise/run, up/across )

mx = 175/5 ( you could have picked any point in the graph )

mx = 35

the m is useless now so we discard it

y= 35x+0

if x = 1

then y = 35(1)+0

y= 35

at the coordinate x=1 y is 35

How are area and volume similar? (will give brainliest for the right answer)

A both take up an amount of space

B both are 2-dimensional

C both have length, width, and height

D both are 3-dimensional

Answers

Answer:

the one where it say it takes height

Step-by-step explanation:

Answer:

C

Step-by-step explanation:

I got 100%

Data can be classified as categorical or
numerical. Which question would be classified as
numerical?
A. Which grade are you in?
B. What is your zip code?
C. Who is your favorite artist?
D. How many texts did you send this week?

Answers

Answer:

D

Step-by-step explanation:

Please Help Me ASAP.

Answers

Answer:

x > -10

Step-by-step explanation:

5 - 3x > 35

-5           -5

-3x > 30

[tex]\frac{-3x > 30}{-3}[/tex]= x > -10

How do you find the volume of a cube?

Answers

Answer:

V = s³

Step-by-step explanation:

You multiply all sides together (L×W×H)

Given that you have a pentagon. What would be the measure of the sum of the exterior angles?

Answers

Answer:

360°

Step-by-step explanation:

the sum of the exterior angles of any polygon = 360°

How do you find the sector area of a circle?

Answers

Answer:

where's question.....

Write the equation of the line that passes through the points (2,-4) and (4,2) in slope-intercept form.

Answers

Answer:

Slope Intercept Form: y=3x-10

Step-by-step explanation:

First, we need to solve the slope.

The formula: y2-y1/x2-x1 = m


Coordinate Points:

(2, -4) ; (4,2)

Do 2 - (-4) for the y's and 4-2 for the x's

Formula: 2-(-4)/4-2

2 - (-4) is a positive answer since the negatives cancel to a positive.

That shall be 6.


4-2 = 2

Now we have 6/2 which means 6 divided by 2 which is 3.

Our slope is 3.

Slope-Intercept Formula: y=mx+b

Our "m" is 3

y = 3x + b


Our b which is the y-intercept is undefined.

We need to plug one of the coordinates into the formula to find it.

Plug (2,-4) into the formula.

-4 = 3(2) +b

Do 3 x 2 first

-4 = 6 + b

Now subtract 6 on both sides

-6-4 = b

Our y-intercept is -10 because negative subtracted by negatives is an addition number followed by the greater number's sign.

Formula: y=3x-10

Answer:

y = 3x - 10

Step-by-step explanation:

To determine the line that passes through the points (2, -4) and (4, 2), we need to determine the slope of the line. Then, using the slope of the line and any point, we can determine the equation of the line using point slope form.

How to determine the slope of the line?

The slope of the line can be determined by using the formula (y₂ - y₁)/(x₂ - x₁), where x₂ and y₂ are the coordinates of the second point; x₁ and y₁ are the coordinates of the first point.

Determining the slope of the line:

[tex]\implies\large\text{Slope} = \dfrac{y_{2} - y_{1} }{x_{2} - x_{1} }[/tex]

In this case, our first point and second point are (2, -4) and (4, 2) repectively as stated in the question. Therefore,

Point₁   =  (x₁, y₁)  =  (2, -4)   ⇒  x₁ = 2     y₁ = -4Point₂  =  (x₂, y₂) =   (4, 2)   ⇒  x₂ = 4      y₂ = 2

When we substitute the following into the formula, we obtain;

[tex]\implies\large\text{Slope} = \dfrac{2- (-4)}{4 - 2 }[/tex]

When we perform subtraction, we obtain;

[tex]\implies\large\text{Slope} = \dfrac{2- (-4)}{4 - 2 } = \dfrac{2 + 4}{2 } = \dfrac{6}{2}[/tex]

Which when simplified, we get;

[tex]\implies\large\text{Slope} = \dfrac{6}{2} = 3[/tex]

Determining the equation of the line:

As said above, to determine the equation of the line with the slope and a point given, we can use point slope form. The chosen point must be on the line. The question states that "the line that passes through the points (2,-4) and (4, 2)". Therefore, we can tell that (2,-4) and (4, 2) are points that are on the line. Let's choose (4, 2) as our chosen point.

Chosen point: (4, 2)

Now, let's substitute the slope of the line and the coordinates of the chosen point in the point slope form equation.

⇒ Point slope form: y - y₁ = m(x - x₁)⇒ Point slope form: y - 2 = 3(x - 4)

Finally, let's simplify the point slope equation and convert it into slope intercept form (as stated in question).

⇒ Point slope form: y - 2 = 3x - 12

The slope intercept form states that;

Slope intercept form: y = (m)x + (b)  

We can see that the "y" variable is isolated on one side of the equation [y = (m)x + (b), Slope intercept form equation]. Thus, we need to isolate the y-variable in y - 2 = 3x - 12 to obtain our equation in slope intercept form. This can be done by adding 2 to both sides of the equation.

⇒ y - 2 + 2 = 3x - 12 + 2⇒ y = 3x - 10

Therefore, the equation in slope intercept form is y = 3x - 10.

A triangle has angle measures of 41 cm, and 24 cm. Find the measurement of the missing angle in the triangle.

Answers

Answer:

115

Step-by-step explanation:

41+24=65.

180-65=115

Please someone help!!!!
Kristine observes the top of a lookout tower from a point 220 ft from its base.

If the indicated angle of elevation measures 37º, how tall is the tower? Give your answer to the nearest tenth of a foot.

Answers

Answer:

height of the tower: 165.8 ft

use tan rule:

[tex]\sf \sf tan(x)= \dfrac{opposite}{adjacent}[/tex]

Here:                            [ your calculator should be in degree mode [D] ]

x = 37°opposite = height of the toweradjacent = 220

Solve:

[tex]\hookrightarrow \sf \sf tan(37)= \dfrac{t}{220}[/tex]

[tex]\hookrightarrow \sf t = \sf tan(37)*220[/tex]

[tex]\hookrightarrow \sf t = 165.8 \ ft[/tex]

Other Questions
True or false: A run on sentence is an incomplete sentence. Hello everyone i need help with the following question?If x=3 and y=67what is 6x 8y + 27x - 6y + 3= QUESTION 4Click here to read the passage before answering thequestion.Read this sentence from paragraph 7 of the passage.The brand flashes on the screen or is highlightedprominently on the rear of the new automobile as thelight turns green and the car speeds off in front of him.Which of the following could best replace the wordprominently in this sentence?O a. highlyO b. onlyO c. noticeablyd. actually What are the domain, range, and asymptote of h(x) = (1.4)x + 5?domain: {x | x is a real number}; range: {y | y > 5}; asymptote: y = 5domain: {x | x > 5}; range: {y | y is a real number}; asymptote: y = 5domain: {x | x > 5}; range: {y | y is a real number}; asymptote: y = 5domain: {x | x is a real number}; range: {y | y > 5}; asymptote: y = 5 brainliest is right. HELP FAST!! BRAINLIEST!Boron-10 is commonly used as a control rod for nuclear reactors because it absorbs _______ and releases an alpha particle and a lithium-7 nuclide.A. a neutronb. a gamma rayc. an electrond. a protron You deposit $2500 into an account that pays3.5% annual interest compounded daily. How long will it take for thebalance to reach $3000 1. Complete the following sentences with the correct forms of the IRREGULAR verbs in parenthesis: (30 points)a. Sandra __________la tarea por la tarde, pero yo _________ la tarea por la maana. (HACER) b. Mara y Ana___________muchas pelculas, pero yo no ___________pelculas de amor. (VER) c. Yo ___________Madrid, pero mi hermana Pilar no _________________la ciudad. (CONOCER) d. Marta ___________ bien, pero yo _________________ enfermo (ESTAR) e. Mi hermano______________ahora, pero yo no ____________ hasta las 3 de la tarde (SALIR) 2. Use the PRESENT TENSE of SABER or CONOCER: (30 points)a. Carmen____________ tocar el piano y ___________a muchos msicos. b. Vamos a ______________Cancn algn da, ni t ni yo_____________ cundo. c. Vosotros ________________bien al doctor Vlez? d. La enfermera __________________qu hacer en estos casos. e. Yo no_____________ la respuesta. La______________ t? f. Quieres ________________a mi amiga, Sandra? g. Gines_________________jugar al pker muy bien. 4/ Determine the words that should be capitalized in the following sentence.every thursday i watch the series ghost hunters. A. Thursday, I , The, Series, Ghost, HuntersB. Every, Thursday, I, Ghost, HuntersC. Every, Thursday, Ghost, HuntersD. Every, Thursday, I, The, Series The hypotenuse of a right triangle measures 4 cm and one of its legs measures 3 cm. Find the measure of the other leg. If necessary, round to the nearest tenth. help me guys pls pls pls Jermaine plots the points (0, 0) and (4, 11) on a graph to represent a proportional relationship. Which of the following equations represents the relationship between the x and y-values? Which inequality does this graph show? LOOK AR PIC PLS ANSWER FAST Which equation represents the line shown in the graph below Examples of stress include:A) when you are happyB) when you are running out of time to complete a taskC) when you are studying for a test, but forgot your notesD) when somebody gives you a complimentE) when you lose a friend please help me answer this PAR stands for A. participatory action research. B. political agenda regulations. C. public awareness research. D. productive analysis of resources what is the mean absolute deviation (MAD) of the data set? 78, 82, 84,88,92 What should you do for an individual with an open fracture on their leg The motion of gas particles is described by straight line motion, followed by a collision and a change in direction. This is know as