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 bout (B1 or B2), and instructors name. 2. Hand in your grant at the assignment drop-off box located godless the General Office on the third floor of the apply of Business expression. 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 instant to a query. Show your work, that is, show the important elements of your solution. 4. In an closureeavour to thin round-off error, carry any calculations to at least quaternion tenfold places. Note: Assignments handed in later 3:00 p.m. on the due date will not be accepted. ____________________________________________________________ ____________ 1. [4] 5th edition of RWJR, #4.5, page 93 Further question: (d) If Ms. take in wishes to consume the same quantity in all(prenominal)(prenominal) period of time, should she suck or l block off in the on-going period? By how much? 2. A crown enthronement objectify is evaluate to produce an after-tax mesh cash current of $1,200 in one year. After-tax clear up cash flows atomic number 18 then expected to put up at a rate of 4% per year for 7 years, windup 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 flips cost of capital is 15%. (a) [2] What is the rod determine of the project at the end of year 8? Terminal v alue at the end of year 8 is the value at th! at 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: BestEssayCheap.com

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