# Fin 534 homework set #4

Don't use plagiarized sources. Get Your Assignment on
Fin 534 homework set #4
Just from \$13/Page

Directions: Answer the following questions on a separate document. Explain how you reached the answer

or show your work if a mathematical calculation is needed, or both. Submit your assignment using the

assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 through 5:

Assume you are presented with the following mutually exclusive investments whose expected net cash

flows are as follows:

EXPECTED NET CASH FLOWS:

Year  Project A  Project B

0  −\$400  −\$650

1  −528  210

2  −219  210

3  −150  210

4  1,100  210

5  820  210

6  990  210

7  −325  210

1.  Construct NPV profiles for Projects A and B.

2.  What is each project’s IRR?

3.  If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost

of capital were 17%, what would be the proper choice?

4.  What is each project’s MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as

the end of Project B’s life.)

5.  What is the crossover rate, and what is its significance?

FIN 534 – Homework Set #4

and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of

Strayer University.

FIN 534 Homework Set #4  Page 2 of 2

Use the following information for Questions 6 through 8:

The staff of Porter Manufacturing has estimated the following net after-tax cash flows and probabilities for

a new manufacturing process:

Line 0 gives the cost of the process, Lines 1 through 5 give operating cash flows, and Line 5* contains the

estimated salvage values. Porter’s cost of capital for an average-risk project is 10%.

Net After-Tax Cash Flows

Year   P = 0.2     P = 0.6     P = 0.2

0    −\$100,000    −\$100,000    −\$100,000

1   20,000    30,000     40,000

2   20,000    30,000     40,000

3   20,000    30,000    40,000

4   20,000    30,000     40,000

5   20,000    30,000     40,000

5*   0     20,000     30,000

6.  Assume that the project has average risk. Find the project’s expected NPV. (Hint: Use expected

values for the net cash flow in each year.)

7.  Find the best-case and worst-case NPVs. What is the probability of occurrence of the worst case

if the cash flows are perfectly dependent (perfectly positively correlated) over time?

8.  Assume that all the cash flows are perfectly positively correlated. That is, assume there are only

three possible cash flow streams over time—the worst case, the most likely (or base) case, and

the best case—with respective probabilities of 0.2, 0.6, and 0.2. These cases are represented by

each of the columns in the table. Find the expected NPV, its standard deviation, and its

coefficient of variation for each probability.

Use the following information for Question 9:

At year-end 2013, Wallace Landscaping’s total assets were \$2.17 million and its accounts payable were

\$560,000. Sales, which in 2013 were \$3.5 million, are expected to increase by 35% in 2014. Total assets

and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically

uses no current liabilities other than accounts payable. Common stock amounted to \$625,000 in 2013,

and retained earnings were \$395,000. Wallace has arranged to sell \$195,000 of new common stock in

2014 to meet some of its financing needs. The remainder of its financing needs will be met by issuing

new long-term debt at the end of 2014. (Because the debt is added at the end of the year, there will be no

additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 45% of

earnings will be paid out as dividends.

9.  What were Wallace’s total long-term debt and total liabilities in 2013?

Calculate the price
Pages (550 words)
\$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Writing Services
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Other
The PowerPoint Presentation is PHENOMENAL! The writer went above and beyond my expectations! Thank you so much.
Customer 452455, February 15th, 2023
English 101
Good response. Next time, properly capitalize headings in the requested style.
Customer 460641, March 30th, 2022
Military
Very good job
Customer 456821, May 13th, 2022
Aviation
Great job!
Customer 454145, April 12th, 2020
Other
Short and precise as I wanted. Thank you!
Customer 462359, October 14th, 2022
Military
Good job
Customer 456821, January 2nd, 2023
Literature
Beautifully written essay!
Customer 462241, November 25th, 2021
Military
Good work.
Customer 456821, May 11th, 2022
Nursing
Excellent work!!!
Customer 453939, June 25th, 2020
Military
good job
Customer 456821, October 8th, 2022
Technology
I want to say, "Thank you so much!" to the writer that completed the revision to my specifications. Although there are slight changes that need to be made, I am satisfied with the final product.
Customer 452455, January 19th, 2023
History
Good work.
Customer 462717, May 15th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend