Question: can you solve this in An easier way? help, please 7) XYZ Systems is considering a new project with a 4-year economic life. The project's

can you solve this in An easier way? help, please
can you solve this in An easier way? help, please 7) XYZ

7) XYZ Systems is considering a new project with a 4-year economic life. The project's equipment would cost $40,000 and be depreciated using the MACRS 3-year rates (33%, 45%, 15%, and 7%), and it would have no salvage value. Net working capital would need to be increased by $5,000 at the beginning of the project, but it could be recovered at the end of the project's life. Revenues are expected to be constant at $45,000 over the project's life, and operating costs are expected to be constant at $10,000 over the project's life. The tax rate is 35%, and there is no inflation. What are the net cash flows in Year O and Year 4? 8) You work for XYZ Corp., which has a beta of 1.5. The market return is expected to be 8%, and the risk-free rate is 2%. The Fed just announced a policy change that increased the risk-free rate to 3%. How did the increase in the risk-free rate impact your company's cost of equity? 9) XYZ Inc. is expected to pay a dividend of D1 = $1.60 per share at the end of the year, and that dividend is expected to grow at a constant rate of 4.00% per year in the future. The company's beta is 0.9, the market risk premium is 6.50%, and the risk-free rate is 2.00%. What is the company's current stock price

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!