Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Amber Company is considering a one-year project that requires an initis investment of $500
Amber Company is considering a one-year project that requires an initis investment of $500.000. However, to raise this capital, the company w incur Rotation costs that are 2% of the initiat investment amount. At the end of the year, the project is expected to produce a cash inflow of $552.000. What is the rate of return that the company expects to earn on this project after taking flotation costs into consideration? Your answer should be between 7.32 and 16.60, rounded to 2 decimal places with no special characters.
Total initial investment=investment+(flotation cost*investment)=500,000+(2%*500,000)=500000+10,000=510000
rate of return=(552,000/510000)-1=1.0824-1=8.24%
