FIN 101 SEU Market Price & Accounting Finance Worksheet

Description

1 attachmentsSlide 1 of 1attachment_1attachment_1

Unformatted Attachment Preview

Assignment 3 FIN101
Course Name: Principles of Finance
Student’s Name:
Course Code: FIN101
Student’s ID Number: S
Semester: 2nd
CRN: 21952
Academic Year: 1440/1441 H
For Instructor’s Use only
Instructor’s Name: Dr. Moin Uddin
Students’ Grade:
/5
Level of Marks: High/Middle/Low
Instructions:
➢
This Assignment must be submitted on Blackboard (WORD format only)
via the allocated folder.
➢
Email submission will not be accepted.
➢
You are advised to make your work clear and well-presented; marks may be
reduced for poor presentation. This includes filling your information on
the cover page.
➢
Assignment will be evaluated through BB Safe Assign tool.
➢
Late submission will result in ZERO marks being awarded.
➢
The work should be your own, copying from students or other resources will
result in ZERO marks.
➢
Use Times New Roman font 12 for all your answers.
Assignment Questions
Q1: Carrefour is expecting its new center to generate the following cash flows:
Years
Initial
Investment
Net operating cashflow
0
1
2
3
4
5
($35,000,000)
$6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000
a. Determine the payback for this new center. (1 mark)
b. Determine the net present value using a cost of capital of 15 percent. Should the project be
accepted? (1 mark)
Answer:
Q2. What is the EAC of two projects: project A, which costs $150 and is expected to last two
years, and project B, which costs $190 and is expected to last three years? The cost of capital
is 12%. (1 mark)
Answer:
Q3. A company pays annual dividends of $10.40 with no possibility of it changing in the
next several years. If the firm’s stock is currently selling at $80, what is the required rate of
return? (1 mark)
Answer:
Q4. Stag corp has a capital structure which is based on 50% common stock, 20% preferred
stock and 30% debt. The cost of common stock is 14%, the cost of preferred stock is 8% and
the pre-tax cost of debt is 10%. The firm’s tax rate is 40%. (1 mark)
a. Calculate the WACC of the firm.
b. The firm is considering a project that is equally as risky as the firm’s current
operations. This project has initial costs of $280,000 and annual cash inflows of
$66,000, $320,000, and $133,000 over the next three years, respectively. What is
the net present value of this project ?
Answer:

Purchase answer to see full
attachment

Explanation & Answer:
Worksheet

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.