Question: need help with this question please 3. Mario wants to invest in a project that requires an investment of $250,000. His advisors estimate that the

need help with this question please
need help with this question please 3. Mario wants to invest in

3. Mario wants to invest in a project that requires an investment of $250,000. His advisors estimate that the cashflow for the first period will be $65,000 and after that the cashflows will increase at a 15% annual rate. If the project will be operative for 5 years and will be financed by a personal loan at a 9% annual rate. What do you suggest him to do? Estimate NPV, IRR and payback to conclude. a) Now consider that the project will be financed by Mario's company. So, this new investment will be financed by 60% equity and 40% by debt. Investors asked for a rate of 13%, and the cost of debt is 9%. Consider taxes of 30%. Conclude which option is better for him. b) Now he wants to consider inflation of 8%. Is the project still suggested? What about an inflation of 9%

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!