Problem 9.18 – NPV and Discount Rates
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Given cash flows and discount rates, find the NPV and IRR.
Given cash flows and discount rates, find the NPV and IRR.
Determine the expected dividend and capital gains yields under various scenarios and explain the relationship between dividend and capital gains.
Conduct a best-case and worst-case scenario analysis using the given estimates for the price, variable costs, fixed costs, and quantity, accounting for the specified uncertainty level in the estimates. Complete the grid of scenarios for the base case, best case, and worst case.
Given an estimate of free cash flows, growth rate, and WACC… determine the present value of the free cash flows for the explicit period, calculate the horizon value, and compute the price per share.
Given cash flows and interest rate, calculate MIRR using the discounting, reinvestment, and combination approach methods.
Given the information on the airlines (after-tax operating income, depreciation expense, capital expenditures, free cash flow, etc.)… find the company’s stock price today using the corporate valuation model approach.
Given cash flows, discount rate, and reinvestment rate, calculate MIRR using the discounting, reinvestment, and combination approach methods.
Calculate the base-case operating cash flow and NPV, determine the sensitivity of NPV to changes in sales and OCF to changes in variable costs, and analyze the impact of changes in projected sales and variable costs on NPV and OCF.
Calculate the best-case and worst-case NPV figures for the project, considering the given estimates for cost, life, depreciation, sales, price, variable and fixed costs, tax rate, and required return, while accounting for the specified uncertainty level.
Wayne-Martin Electric Inc. (WME) has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market.