Maurice Tutor

(5)

$15/per page/Negotiable

About Maurice Tutor

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 401 Weeks Ago, 2 Days Ago
Questions Answered: 66690
Tutorials Posted: 66688

Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 06 Jun 2017 My Price 13.00

Risk-adjusted discount rates

Risk-adjusted discount rates—Basic Country Wallpapers is considering investing in one of three mutually exclusive projects, E, F, and G. The firm’s cost of capital, k, is 15%, and the risk-free rate, RF, is 10%. The firm has gathered the following basic cash flow and risk index data for each project.

 

 

Project (j)
 

E

F

G

Initial investment (CF0)

$15,000

$11,000

$19,000

Year (t)

Cash inflows (CFt )

1

$6,000

$6,000

$4,000

2

6,000

4,000

6,000

3

6,000

5,000

8,000

4

6,000

2,000

12,000

Risk index (RIj)

1.8

1

0.6

a. Find the net present value (NPV) of each project using the firm’s cost of capital. Which project is preferred in this situation?

b. The firm uses the following equation to determine the risk-adjusted discount rate, RADRj, for each project j:

RADRj = RF + [RIj  x (k-RF)]

where

RF = risk-free rate of return

RIj = risk index for project j

K = cost of capital

Substitute each project’s risk index into this equation to determine its RADR.

c. Use the RADR for each project to determine its risk-adjusted NPV. Which project is preferable in this situation?

d. Compare and discuss your findings in parts a and c. Which project do you recommend that the firm accept?

Answers

Maurice Tutor
(5)
Status NEW Posted 06 Jun 2017 12:06 AM My Price 13.00

Hel-----------lo -----------Sir-----------/Ma-----------dam----------- Â-----------  -----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------. P-----------lea-----------se -----------pin-----------g m-----------e o-----------n c-----------hat----------- I -----------am -----------onl-----------ine----------- or----------- in-----------box----------- me----------- a -----------mes-----------sag-----------e I----------- wi-----------ll

Not Rated(0)
Relevent Questions