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# What is the NPV of a project that required a net investment of \$500,000 and produced net cash flows

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1.    What is the NPV of a project that required a net investment of \$500,000 and produced net cash flows of \$150,000 per year for the next 5 years and \$110,000 for the sixth year? Assume the cost of capital is 14%.

(A) \$65,077
(B) \$392,580
(C) \$588,710
(D) \$60,920

Calculate the after-tax cost of preferred stock for Tennessee Valley Power Company, which is planning to sell \$150 million of \$4.25 cumulative preferred stock to the public at a price of \$28 per share. Flotation costs are 11%. Tennessee Valley has a marginal income tax rate of 40%.

(A)    17%
(B)    15%
(C)    22%
(D)    8%

IOU, a technology firm, issued a 10% coupon, 20 year to maturity first mortgage bond five years ago. If the current market rate of debt for IOU is 6%, at what price should this bond sell, to the nearest dollar? Assume a par value of \$1,000, and pays interest semi-annually.

(A)    \$852
(B)    \$1000
(C)    \$1392
(D)    \$1388

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## [Solved] What is the NPV of a project that required a net investment of \$500,000 and produced net cash flows

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• Submitted On 21 Dec, 2014 08:54:26

1.    What is the NPV of a project that required a net investment of \$500,000 and produced net cash flows of \$150,000 per year for the next 5 years and \$110,000 for the sixth year? Assume the cost of capital is 14%.

(A) \$65,077
(B) \$392,580
...

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