A ) For a rate of return of 15%, calculate the net present value (NPV), THEN Calculate the present value ratio (PVR) AND Calculate the benefit-cost (B-C) ratio B) Is this project economically satisfactory, why?
Q: :If the annual worth value of an alternative is equals to a positive value, we consider this project…
A: MARR is Minimum acceptable rate of return
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A: Sales revenue refers to the amount received by the company from selling goods and services to the…
Q: What is the net present value of the project? (Round your answer to the nearest whole dollar…
A: Net Present Value: It is the project's present worth considering both the initial investment and…
Q: Internal rate of return % If the required return is 15 percent, should the firm accept the project?
A: IRR is the rate of return at which the NPV of the project becomes zero. If the required return from…
Q: With a required rate of return of 17%, the IRR of a standard capital budgeting project is equal to…
A: Internal rate of return is the rate which the NPV of the project is zero. Net present value is the…
Q: Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses…
A: NPV = Cash Inflows - Cash outflows = (Annual cash inflows * cumulative PV @ 12% for 7 years) - Cost…
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A: Given Data: Project Cost (cash Outlay) = RM 45000 Operational cost Per year = RM 9000 Cash Inflow…
Q: Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of…
A: Solution (A) If the project is mutually exclusive and MARR = 20% Firstly let's arrange the project…
Q: Suppose a project with a 6% discount rate yields R5000 for the next three years. Annual operating…
A: NPV is the first priority rule.
Q: A project has an expected net present value of $50,000 with a standard deviation of the net present…
A: Net Present Value is defined as the difference between the cash flows of the present value and cash…
Q: A project has an investment cost of $200,000 and a profitability index of 1.6. What is the net…
A: Profitability index = PV of cash inflows/PV of cash outflows PV of cash inflows= 1.6 *$ 200000 = $…
Q: Net present value Using a cost of capital of 12%, calculate the net present value for the project…
A: NPV is the sum of present value of future cashflows less initial investment
Q: Please help to solve all the below :) What is the average return per year for a project that has…
A: In this rate of return depends on initial investment and annual returns from projects.
Q: nternal rate of return For the project shown in the following table, , calculate the internal rate…
A: IRR is the rate at which NPV is zero
Q: find The equivalent annual net benefit of this project in excel.
A: Equivalent Annual Net Benefit =Net Present Value of the project/ Present Value factor for desired…
Q: You are considering the following two mutually exclusive projects. The required rate of return is…
A: Required return for project A = 11.25% Required return for project B = 10.75%
Q: a. What are the project’s annual net cash inflows? b. What is the present value of the project’s…
A: Since you have asked a question with multiple sub parts , we will solve first three subparts for…
Q: Suppose that there are two alternatives as project I with initial cost of 50.000 TL. and project II…
A: MARR=10% incremental return =4% PROJECT 1 MARR=10% PROJECT 2 MARR=10+4=14% initial cost=50000…
Q: Company A has a project which is expected to provide positive cash flows of $4,400 the first year,…
A: Internal rate of return IRR is one such capital budgeting approach. For a given project or…
Q: Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of…
A: The IRR (internal rate of return ) and the MARR (minimum acceptable rate of return) means the rates…
Q: With a required rate of return of 17%, the IRR of a standard capital budgeting project is equal to…
A: Required rate of return = 17% IRR = 19%
Q: A project has the following projected outcomes in dollars: $250, $350, and $500. The probabilities…
A: In this question we need to calculate the expected value of the outcomes form the given details in…
Q: Consider two projects: A) with cashlows in years 0-4 of -300$, 120$, 120$, 120$ and respectively…
A: payback is the time taken to retrieve the initial investment for A: for first 2 years cash inflow =…
Q: Determinethe payback period for each b.Calculatethe net present value (NPV) for each…
A: Net present value is the difference between the present value of cash flow and initial investment of…
Q: The project NPV is 14.95. The initial investment 15m. The discount rate is 4.5% per annum. What is…
A: The payback period is one of the capital budgeting techniques which is only used to estimate the…
Q: Find the external rate of return (ERR) for the following project when the external reinvestment rate…
A: External Rate of return(ERR) refers to the rate of return which directly measures all the cash…
Q: Please answer the following questions using the information below: NPV. Using a 10% required rate…
A: Profitability Index or PI refers to the ration between aggregate worth of inflows and corresponding…
Q: The return expected from the project no. 542 is 22 percent. The standard deviation of these return…
A: Return expected =22%Standard deviation = 11%
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A: Annual rate of return can be evaluated by dividing net income by average investment. We can measure…
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A: Capital budgeting is a process used by the companies to use its limited resources to get the best…
Q: What is the discount rate for year 2? ____________ What is the NPV of all costs for year 1?…
A: As you have asked question with multiple parts , we will solve the first 3 parts as per the policy…
Q: e) Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the…
A: Capital Budgeting Techniques are used to choose the most profitable investment alternative. Based on…
Q: GeoWorld Systems uses a subset of the following questions during the interview process for new…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: At MARR of 12%, which project would you select? a. Select A as it has a higher rate of return. b.…
A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…
Q: You are evaluating five investment projects. You have already calculated the rate of return for each…
A: Introduction: Incremental investment is determined by subtracting a lower cost investment project…
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A: To calculate the % change in net present worth first we have to calculate the Net present worth at…
Q: A project requires an investment of $2,500 and has a net present value of $430. If the internal rate…
A: The ratio that evaluates the profitability of the investment is term as the profitability index…
Q: The following information is available on two mutually exclusive projects. Project…
A: Project A; Cash flow; Year 0 = - $700 Year 1 = $200 Year 2 = $300 Year 3 = $400 Year 4 = $500…
Q: a. If the discount rate is 0%, what is the project's net present value? b.lf the discount rate is…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Project A has a net present value of zero when the discount factor of 20% is used. How much return…
A: NPV is used to take capital budgeting decisions If NPV of project is positive, Project must be…
Q: Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the…
A: Capital Budgeting Techniques are used to choose the most profitable investment alternative. Based on…
Q: You are considering a project with an initial cost of $59,700 and annual cash inflows of $10,905 in…
A: At profitability index 1 present value of cash inflow will be equal to initial cost, therefore to…
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- An investment project will involve spending $300,000 at time zero and $450,000 at the end of year one. These investments will generate gross revenues of $420,000 at the end of year one and $660,000 at the end of each year two through eight. A royalty of $42,000 in year one and $66,000 in year two through eight will be incurred along with operating costs of $250,000 in year one and $350,000 at the end of each year two through eight.Calculate the project before-tax cash flow for each year.A project requires an initial investment of $150,000, to be depreciated straight-line over 3 years to an expected salvage value of $0. In addition, working capital will increase during the life of the project and amount to 20% of next year’s revenues, with the investment in working capital to be made at the beginning of each year. The project will generate $150,000 additional annual revenues and $85,000 additional annual expenses. The tax rate is 25%. Cost of capital amount to 7,5%. Please calculate the Net Present Value of the project and show your calculations. Would you recommend the investment? Please explain your advice.A proposed capital project is expected to produce operating cash inflows of $123,000 per year for 4 years. At the beginning of the project, inventory will increase by $8,500, accounts receivable will increase by $11,300, and accounts payable will increase by $4,100. All net working capital will be recovered at the end of the project. The initial cost of fixed assets required for the project is $298,000. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. No bonus depreciation will be taken. The fixed assets will be salvaged at the end of the project, creating an aftertax cash inflow of $32,000. What is the net present value of this project given a required return of 14.1 percent? O $105,754 O $76,935 O$72,097 O $68,916 O $68,735
- A proposed five-year project will require $627,000 for fixed assets, $196,000 for inventory, and $ 34,000 for accounts receivable. Accounts payable are expected to increase by $156,000. The fixed assets will be depreciated straight-line to a zero book value over five years. At the end of the project, the fixed assets can be sold for $255,000. The net working capital returns to its original level at the end of the project. The operating cash flow per year is $62,000. The tax rate is 35 percent and the discount rate is 12 percent. What is the total cash flow in the final year of the project? Group of answer choices $389,530 $358,430 $365, 788 $330,030 $301,750An investment has an installed cost of $531, 800. The cash flows over the four - year life of the investment are projectedto be $217,850, $234, 450, $201, 110, and $149, 820, respectively.For this investment, an initial amount of $25,000 should be paid this year (t=0). As of next year (t=1), five equal payments of $20,000 should also be paid (i.e., from t=1 to t=5). Thus, the sum of the required investment expenditure over those periods is $125,000. How much is the sum of the present value of the required investment expenditure over those periods, assuming that the annual interest rate is 5%?
- A project consists of an annual investment 47,000.00 for four years, with no residual values. The annual revenue forecast is R$ 110,000.00 in the 6 years following the conclusion of the investments, then R$ 120,000.00 per year for 6 years and, finally, R$ 160,000.00 per year in 6 years. The forecast annual costs (including taxes) is R$70,000.00 in the 6 years following the completion of the investments, then R$80,000.00 per year for 6 years and, finally, R$100,000.00 per year in 6 years . Assume that the minimum attractiveness rate is 12% p.a. and calculate the capital efficiency ratio (NPV / PVI) for that project..The initial investment to an equipment is $400,000 and annual revenues are expected to be $190,000 over the six-year life of the furnace. Annual expenses will be $50,000 at the end of year one and will increase by $10,000 each year thereafter. The resale value of the furnace after six years is $20,000. The MARR is 20%. Determine the simple payback period.A highway project is expected to cost $1,100,000 Initially. The annual operating and maintenance cost after the first year is $5,000 and will increase by $500 each year for a project lifespan of 20 years. At the end of the tenth year, the project must be resurfaced at a cost of $450,000. (*) Calculate the present worth of costs (in dollars) for this project over a 20-year period if the annual interest rate is 5 percent. (b) Convert the value obtained in part (a) to equivalent uniform annual costs. (Enter your answer in dollars as a positive value.)
- Ace Barker Inc. is evaluating two mutually exclusive projects: A and B. The initial investment for each project is $42,000. Project A will generate cash inflows equal to $15,600 at the end of each of the next five years; Project B will generate only one cash inflow in the amount of $70,000 at the end of the fifth year (i.e., no cash flows are generated in the first four years). The required rate of return of Ace Barker Inc. is 10 percent. Which project should Ace Barker Inc. purchase? O Project A should be purchased because it has a higher net present value (NPV) than Project B O Project A should be purchased because it will produce cash every year for five years. O Project B should be purchased because it has a positive net present value (NPV). Neither project should be purchased, because neither has a positive net present value (NPV).A project has an initial cost of $ 128,325 and an estimated recovery value of $ 27,550 at the end of 25 years. Average annual income is $ 36,900. The estimated average annual expenditures for everything except income tax are $ 19,063. The estimated average annual expenses for income tax are $ 7,820. Assuming that the annual income and disbursements are uniform in all 25 years. Calculate the rate of return.A project has a first cost of S120,000 and an estimated salvage value of $20,000 at the end of 25 years. Estimated average annual receipts are 527,900. Estimated average annual disbursements for everything except income taxes are 515,060. Estimated average annual disbursements for income taxes are 54,420. Assuming that annual receipts and disbursements will be uniform throughout the 25 years, analyze the above data and compute internal rate of return. Comment whether this project is viable if the Bank offer an interest rate of 8% on loan.