Friday, 30 March 2018

AlAmal Hospital is expecting its new center to generate the following cash flows:

Q1: AlAmal Hospital is expecting its new center to generate the following cash flows:
Years 0 1 2 3 4 5
Initial investment ($30,000,000)
Net operating cash flows $6,000,000 $8,000,000 $16,000,000 $20,000,000
$30,000,000
a. Determine the payback for this new center.
b. Determine the net present value using a cost of capital of 15 percent.Should the project be accepted?
Q2. Assume a zero coupon Bond with a $1000 Par Value and 15-year maturity, calculate its rate of return if the market price equal $315.240.
Q3. A tax exempt bond was issued at a 10% coupon bond and a maturity of 15 years. The Par Value of the bond is $1000.
At what required market rate (10%, 5% or 14%) does the above bond sell at a discount? At a premium?
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