Essay on Net Present Value and Percent

1. Given the proposed financing plan, describe your approach (qualitatively) to value AirThread. Should Ms. Zhang use WACC, APV or some combination thereof? Explain. (2 points)

2. Architect paid $250K and has completed an unknown, but small amount of renovation work so far. He has not invested anywhere near $150K into renovations

live comfortably on the $500,000 in dividends paid on the stock plus retirement and other income he

"a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what

$2.51. Often investors are willing to pay a Premium for a company that has a high dividend or

Account A - Present Value with Discount rate of 6% = 6500/(1+6%) = 6500/1.06 = $6,132.08

Select three of these joint projects to consider in depth. For the three projects you have selected:

2. Compute the NPV of both projects. Which would you recommend? What if they are not mutually exclusive?

Therefore, if Joe continues to invest $5,000 annually ($416.67 monthly) into his saving account for the next 25 years, his investment, assuming a current balance of $5,000 compounded daily at 0.01% (as currently being offered by WellsFargo), will amount to about $130,170 . Now, Joe has also invested in certificate of deposits (CDs). He reported as simply been reinvesting his original $5,000 for the past six years. Assuming a stated 0.30% interest rate on a two year CD with daily compounding, his $5,000 investment is now worth about $5,091 . However, he seeks to reinvest this until retirement. Performing similar calculations, we obtain a grand total of $5,488 . This is what his CD invest would amount to if he were to reinvest the current $5,091 at a 0.30% interest rate with daily compounding for the next 25 years.

will not be able to survive in the long run. In order to show others

A lady named Susan Wong is budgeting for the coming year (Year X). During year X, she has to cover monthly expenses as well as irregular monthly financial obligations, and she plans to do so by investing the money not used to cover monthly expenses in either a 1-month, 3-month or 7-month investment scheme whose yields are 6%, 8% and 12% per year nominal respectively. When the investments mature, Susan will use the principals as part of her budget and invest all the interests in a long-term investment that is not considered in her budgeting process.

During the early steps of the projects until reaching commercial and financial close, the parties initiating the project and the developer will have to make critical decision to structure the project. An important part of the negotiation will focus on the risk allocation to the various stakeholders of the project in order to satisfy the prim objectives and drivers of the parties involved and distribute the risk to the party most able to manage and bear them.

5. How does the attractiveness of the project vary under different economic scenarios and financing arrangements?

Since it will involve technology in service delivery, there will reduced costs such as the cost of labor.

3. Do the organizational have the resources with the knowledge and skills to support the project?