GB550M3_Assignment.docx(1) GB550-M3 Financial Management Practices Investment Projec

GB550M3_Assignment.docx(1)    GB550-M3   Financial Management Practices  Investment Project Value Purdue University Global 1.              Complete problem: Cost of Equity-CAPM  XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 5%, and the yield on a 10-year T- bond is 7%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 20%. What is the estimated cost of common equity using the CAPM? Show your work.  Cost of Equity= risk free rate of return + Beta * (market rate of return – risk free rate of return)  4.47  0.114  0.114  2.              Complete problems: NPV, IRR, MIRR, Profitability Index, Payback, Discounted  Payback  A project has an initial cost of $60,000, expected net cash inflows of $10,000 per year for 8 years, and a cost of capital of 12%. Show your work.  o                                  What is the projects NPV? (Hint: Begin by constructing a timeline).  NPV=  -10,323.60  Initial cost: $60,000  Life of project: 8 years  Annual cash inflow: $10,000  Cost of capital: 12%  Rate  0.12