Question

Kendall Square Associates (KSA), is a partnership set up to develop a condo in Cambridge. Its only asset is a condo project to be completed next year, which will yield a net cash flow of $70 millon (in year 1). KSA faces a corporate tax rate of 35% and its asset has an expected rate of return (cost of capital) of 25% by the market. KSA pays out all its earnings to shareholders as dividends. Assume shareholders pay no taxes on dividends. Don't copy from others!!!!!

Answer 1

The subject of this question is Business at a College level. Kendall Square Associates (KSA) is a partnership developing a condo project in Cambridge. The project is the only asset of KSA and is expected to generate a net cash flow of $70 million in the first year. KSA has a corporate tax rate of 35% and the expected rate of return, or cost of capital, for the project is 25%.

Step-by-step explanation:

The subject of this question is Business at a College level.

Kendall Square Associates (KSA) is a partnership that is developing a condo project in Cambridge. The project is the only asset of KSA and is expected to generate a net cash flow of $70 million in the first year. KSA has a corporate tax rate of 35% and the expected rate of return, or cost of capital, for the project is 25% by the market. The company pays out all its earnings to shareholders as dividends and shareholders do not pay taxes on these dividends.