Home / Questions / The HighFlying Growth Company HFGC has been growing very rapidly in recent years making it...
The? High-Flying Growth Company? (HFGC) has been growing very rapidly in recent? years, making its shareholders rich in the process. The average annual rate of return on the stock in the last few years has been 23?%, and HFGC managers believe that 23?% is a reasonable figure for the? firm's cost of capital. To sustain a high growth? rate, the HFGC CEO argues that the company must continue to invest in projects that offer the highest rate of return possible. Two projects are currently under review. The first is an expansion of the? firm's production? capacity, and the second project involves introducing one of the? firm's existing products into a new market. Cash flows from each project appear in the following? table:
.
a. Calculate the NPV for both projects. Rank the projects based on their NPVs.
b. Calculate the IRR for both projects. Rank the projects based on their IRRs.
c. Calculate the PI for both projects. Rank the projects based on their PIs.
d. The firm can only afford to undertake one of these investments. What do you think the firm should? do?
year | plant expansion | plant introduction |
0 | -$3,400,000 | -$400,000 |
1 | $3,000,000 | $300,000 |
2 | $1,750,000 | $275,000 |
3 | $2,000,000 | $325,000 |
4 | $2,500,000 | $400,000 |
core: 2 of 0 pls P10-27 (similar to) ntegrstive Conn g Ranki parry (HFGC high growth rate, ompany the firm's cxit ng products into anew market Cash flow: from cach project appear in the following table: Ea Calculate the NPV both project ank the heir NPV Renk Calculator the PI for both proj:cts. Ral h: projects based detek ld do? plant Arpa Round to Data Table (aiuk the low- der copy spreadsheet. Plant $400. $3,000,000 $300, $325. $2.50 in projects that 9 of 10 (8 complete) v elude possible le of relu id HFGC product apachy and HW Score: 38.04%, 30.04 100 pls Quesuun Help ject involves roducing
Apr 03 2020 Read more Less More
Consider a hypothetical economy described by the following equations:C = 100 + 0.8YdI = 1200G = 1000X = 1110M = 200 + 0.25YT = 250 + 0.3YRequired:i) Compute the equilibri...
Mar 31 2020Revisit Problem 20-15 under the conditions in which a revised traffic analysis indicates that 3.5 × 106 ESALs are expected during the design life and the desired reliabil...
Apr 21 2020Match each term with the best answer.a.Return on equityb.Return on assetsc.Financial leveraged.Debt to equitye.Dividend payout ratiof.Market to book value16.Used as a mea...
Dec 24 2019A heated 6-mm-thick Pyroceram plate (α = 2600 kg/m3 , cp = 808 J/kg·K, k = 3.98 W/m·K, and α = 1.89 × 10–6 m2 /s) is being cooled in a room with air temperature of 25°C a...
Jun 09 2020To achieve a s atisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to industry standard: • explai...
Mar 14 2020Mr Chan in his early was having problems chewing his food He was asked to stick out his tongue It deviated to the right and its right side was quite wasted What cranial...
Feb 15 2020Dammer Corporation wants to raise $2,000,000. The corporation plans to sell 7%, 10-year bonds at the face value of $2,000,000. Dammer Corporation currently has 150,000 sh...
Dec 19 2019The exchange rate in 2007 was R6.8344/$. If the cost of living was the same in the United States and South Africa, forecasting that inflation in 2008 would be about 8.5% ...
Jan 09 2020Big Foot produces sports socksThe company has fixed expenses of $100,000 and variable expenses of $100 per package Each package sells for $200 Compute the contribution ma...
Mar 23 2020Based on what you have read above, what was Jerry’s company using as a cost driver to allocate overhead to the various jobs?Name two ways that reducing costs on the civil...
Apr 13 2020Welcome to MyCourseHelp Services, World's leading Academic solutions provider with Millions of Happy Students.