Answers To Pnelope Pocket Phons

Corporation FinanceBus 35200Case Study: genus Penelope| | 1. What is the NPV of the first gear propagation recall fox, ignoring both the think over of indueing in the jiffy-generation roll and the adventure of giveing the equipment after ii days? We calculate the NPV by adding the categoryly future liberal gold flows of the project discounted at a rate get even to the court of equity. We use the CAPM grammatic construction to calculate the cost of equity, assuming a adventure free rate of 10%, a ? of 1.2 and the market hazard bonus of 8%. We got a cost of equity of 20%. lax silver flows be calculated using the pattern EBIT x (1-TAX) + Depreciation Capex lurch in NWC. The results are presented down the stairs: The NPV of the first generation call back project, ignoring both the possible action of investing in the second-generation project and the accident of switching the equipment after ii course of studys is ($3,154). Since the NPV is negative, this would not be a good investment. 2. If we cut down the survival of the fittest to invest in the second-generation phone, how valuable is the picking to portion out the equipment in the second year? Hint: First sorb the close tree for the project with the election to sell the equipment in the second year. Then, depending on whether the exchange flow increases or decreases, divulge the valuate of the excerpt at the end of the second year.

What is the determine of this option today (use trade pricing in a binominal tree)? Would Penelope fatality to invest under this scenario? Ignoring both the possibility of selling the equipment after two years and investing in the second-generation project, the NPV of the project will be ($3,154). To value the option to sell the equipment in the second year and to calculate NPV of the project with the option we use a binominal tree valuation. We assume: * the cash flows would either increase by 64.9% or decrease by 39.3% over each period * the risk free rate is 10.0% * the maintain price of the put would be $4,000 The value of the option would be...If you compliments to get a full phase of the moon essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper