Department store selling furniture and home furnishing

Finance question 1
Ideal Company owns a department store selling furniture and home furnishing. It is studying the feasibility of opening a new store.
Ideal plans to run the store for only 3 years. The details relating to the project are as follows:
• Additional working capital of $100,000 is required. This level is expected to remain the same until the end of the project.
• Sales of the new store for the 3 years are $500,000, $550,000 and $600,000, respectively.
• Lost sales of in main store due to opening of new store is $50,000 a year.
• Rent and other expenses for the new store amount to $150,000 each year.
• Cost of goods are 50% of sales.
• Cost of market research done 1 year ago is $50,000.
Ideal plans to borrow $500,000 to finance this project. The bank will charge the same loan rate as the existing bank loan that the company has of $2 million. The bank charges the company a loan rate which consists of the risk-free rate and a risk premium of 2%.
Ideal has 1,000,000 common shares with a market price of $2 each. The stock has a beta of 1. Currently, the market risk premium is 5% while the risk-free rate is 3%.
Ideal pays a 20% tax rate.
(a) Determine Ideal’s cost of equity, cost of debt as well as the weighted average cost of capital.

(b) Compute the operating cash flows related to the project.

Don't use plagiarized sources. Get Your Custom Essay on
Department store selling furniture and home furnishing
Just from $10/Page
Order Essay

(c) Compute cash flows from assets for the project.

(d) Compute the NPV of the project using a discount rate of 10 %. Appraise whether the firm should go ahead with the project.(e)The payback period has been criticised for not considering the time value of money and all the project cash flows. Appraise the circumstances when these issues do not matter much.


Get professional assignment help cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Our essay writers are graduates with diplomas, bachelor, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.

Why choose our academic writing service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently







Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Open chat
You can contact our live agent via WhatsApp! Via +1 817 953 0426

Feel free to ask questions, clarifications, or discounts available when placing an order.

Order your essay today and save 20% with the discount code VICTORY