Total project value ($) Debt Option Loan-to-value Rate (%) Interest only period (years) Amortization (years) $35,000,000.00 A 65% 3.25% 3 20 B 70% 3.25% 3 30 C 70% 3.00% 0 30 D 50% 4.25% 0 30
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- Total project value ($) Debt Option Loan-to-value Rate (%) Interest only period (years) Amortization (years) Show Transcribed Text $35,000,000.00 65% 3.25% 3 20 B 70% 3.25% 3 30 с 70% 3.00% 0 30 D 50% 4.25% 0 30 1.- which debt option provides the highest cash on cash return for the first 5 years of the project? (cash of cash return = cashflow after debt service/ equity in project)Prepare a duration table under the following assumptions a.$100,000 fully amortizing loan b. Annual payments c. 20-year amortization d. 7% stated rate e. 9% yieldPrepare a duration table under the following assumptions a. $100,000 balloon loan b. Annual payments c.5-year balloon d. 20-year amortization e. 7% stated rate f. 9% yield
- | Internal Rate of Return Method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $62,818 and annual net cash flows of $14,000 for each of the eight years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 12% 1 2 3 4 5 6 7 8 9 10 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the…Prepare a duration table under the following assumptions a. $100,000 balloon loan b. Annual payments c. 5-year balloon d. 20-year amortization e. 7% stated rate f. 9% yieldUse the information for the question(s) below. Omicron Industries' Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Cash Other Assets 0 500 Liabilities Debt Equity 200 300 Omicron Industries' New Project Free Cash Flows (Millions) Year 0 1 2 3 Free Cash Flows ($100) $40 $50 $60 Cost of Capital Debt Equity TC 6% 12% 21%
- Consider the project balances in following Table for a typical investment project with a service life of four years. Project Balance Cash Period Flow $ (5,200) $ (5,200) $ (3,780) $ (547) $ 3,771 $ 3,600 $ 7,937 1 3. Determine the interest rate used in computing the project balance. O 1496 O 10%6 896 O None of theseBased on the information below, calculate the adjusted present value (APV), given that the project lifespan is 1 year and is being financed by 30% debt: Investment at t=0 € 33,000 Cashflow after yr1 € 39,600 Cost of capital (COC) 53% Cost of debt 43% Tax 33% a) The adjusted present value (APV) is: €-4325.31 b) The adjusted present value (APV) is: €-5307.69 c) The adjusted present value (APV) is: €-7117.65 d) The adjusted present value (APV) is: €-6135.26The following is the total figures over the lifetime oi a project • Revenue (P&L): $300m • Opex (P&L): $50m • Working capital adjustments: $0m • Construction capex: $90m • Interest During Construction (IDC) and Financing Fees (FF): $10m • Maintenance capex: $0m • Tax paid (geared): $30m • Tax paid (ungeared): $50m • Interest paid: $20m • Principal paid: $70m • Equity injection: $30m Calculate the total of CFADS over the lifetime of the project. O $100m O $180m O $200m O $220m O $250m O $280m
- a. What are the NPWS of Projects I, II, III and IV with interest rate 15% compounded quarterly and the analysis for all projects period are 12 years Mutually Exclusive Alternative I II III IV Capital investment ((RM) 100,000 152,000 184,000 220,000 Annual revenues less expenses (RM) 15,200 31,900 35,900 41,500 Market value (end of useful life) (RM) 10,000 15,000 20,000 b. Determine which alternatives are economically acceptable and which one should be selected. с. Which project would you recommend if they are independent projects? State your reason.Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $48,592 and annual net cash flows of $16,000 for each of the four years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 3.465 4 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 4.917 4.355 6 4.111 3.784 3.326 4.160 7 5.582 4.868 4.564 3.605 8 6.210 5.335 4.968 4.487 3.837 5.759 6.802 5.328 4.772 4.031 6.145 10 7,360 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %A project has the following cash flows: Year 0 1 2 3 4 Project Cash Flows -$4,724.00 $2,421.00 $2,421.00 $2,421.00 $2,421.00 Its cost of capital is 11.3 percent. What is the project's discounted payback period? O 1.94 years 2.14 years O2.34 years O2.74 years O 2.54 years