Q: a. Calculate the NPV of each project, using a cost of capital of 15%. b. Rank acceptable projects by…
A: Net Present Value: It is the current worth of the project's annual cash flows and the initial cost…
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A: Answer: A Whichever project has the higher NPV is the more profitable and should be a priority and…
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A: Net present value is the difference of discounted cash outflows and cash inflows.
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A:
Q: requirea: 1. Compute the project profitability index for each project. ord
A: Profitability Index = (Net Present Value + Initial Investment)/Initial Investment…
Q: 2 f
A: Payback period: It is the period required to collect the amount invested in a capital project.…
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A: Information Provided: Required rate = 11% Expand (CF) Purchase Equipment (CF) 0 (400,000)…
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A: NPV is technique in capital budgeting which help in decision making on the basis of future cash flow…
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A: The discounted payback period is the time required for a project to return its initial investment.…
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A: Since you have asked multiple questions, we will solve the first question for you . If you want any…
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A: IRR of project A = 14.5% IRR of project B = 23.5% Cost of capital = 12%
Q: Compute the net present value and profitability index of each project. (If the net present value is…
A: Net present value : it is the difference between present value of cash inflows to the initial…
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A: NPV: For computing NPV, discounted cash flows and initial cash outflow is necessary Hence, the…
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A: Initial Investment of Project Y = 28,400 Initial Investment of Project Z = 64,000 Year Project Y…
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A: The calculations and the steps can be seen below:
Q: to the attached image. pls show formula and solution in manual calculation. 1. NPV of Project…
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Q: A ) For a rate of return of 15%, calculate the net present value (NPV), THEN Calculate the present…
A: Information Provided:
Q: How can we compute the mean return for each project?
A: Mean return refers to the average return that a number of projects of a company earns on an average.…
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A: The question is based on the concept of Financial Management.
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A: Average accounting rate of return =Average net income/initial investment
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Q: (a) Evaluate the projects using each of the following criteria, stating which project(s) DEVCON…
A: Payback Period: It is the period in which the project returns its initial cost. Hence, the lower…
Q: Required: (Evaluate the projects using each of the following criteria, stating which project(s)…
A: Information Provided: Required rate = 15%Years = 4
Q: You have been assigned to perform a project selection based on profitability index. You have…
A: Profitability Index: It is a capital budgeting technique in which projects are ranked according to…
Q: a. Compute the net present value of each project. b. If the company accepts all positive net present…
A: Net present value = - Initial outlay + Present value of future cash flows. Net present value is…
Q: (c) Internal Rate of Return (IRR);
A: (A) Pay back period Year Project A Cumulative Cash Flow A Project B 1 9700 9700 5200 2 8500…
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A: Payback period:- Payback period is the period in which an project breakeven with Initial Investment…
Q: Based on the picture, Calculate: a) The payback period for the project b) The discounted payback…
A: The payback period is a capital budgeting method that represents the liquidity position of a project…
Q: Compute the Profitability Index (PI) for each project? Project A Project B Profitability…
A: Profitability index is an important capital budgeting tool. We use the tool of profitability index…
Q: Consider the following sets of investment projects: (a) Classify each project as either simple or…
A: Step 1: A project is a simple project when the type of cash flow does not change in the…
Q: Required: (Evaluate the projects using each of the following criteria, stating which project(s)…
A: Net present value is the excess of present value of cash inflows over cash outflows.
Q: QUESTION) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to…
A: Accounting rate of return is a ratio in capital budgeting that does not take into account the time…
Q: a. Calculate the Net Present Value to the nearest $000 for Projects A and B if the relevant cost of…
A: NPV is the present value of all the cash flows related to the project over a period of time so as…
c) Calculate the profitability index (PI) for each project
d) Calculate the
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- Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?Problem 1: Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects-M and N. The relevant cash flows for each project are shown in the following table. The firm's cost of capital is 14%. Project M Project N Initial investmecnt (CF) 528,500 527,000 Year (t) Cash inflows (CF) $10,000 10,000 10,000 10,000 $11,000 2. 10,000 9,000 4. 8,000 a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project. d. Summarize the preferences dictated by each measure you calculated and indicate which project you would recommend. Explain why.Consider the following projects: Cash Flows ($) Project D E CO00 C101 -11,700 23,400 -21,700 37,975 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?
- Consider the following projects: Cash Flows ($) Co Project D E -11, 100 -21, 100 C₁ 22, 200 34,500 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 11%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?Question 2: Boisjoly Product Company is considering two mutually exclusive investment projects. The projects' annual expected cash flows are as follows: Estimated Net Cash Flows (million $) Year Project X Project Y 0 (405) (300) 1 134 (387) 2 134 (193) 134 (100) 4 134 600 5 134 600 6 134 850 7 0 (180) (note: numbers in brackets are costs) Compute IRR for each project. If you were told that the company's cost of capital (and also MARR) was 15% per year, which project the company should select?Consider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?
- NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 10%, has estimated its cash flows as shown in the following table: a. Calculate the NPV of each project, and assess its acceptability. b. Calculate the IRR for each project, and assess its acceptability. a. The NPV of project A is $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer. 7 parts remaining Clear All Check Answer 10:3 5/11 Type here to search CupAssume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 13% to evaluate projects such as these. Time Project A Cash Flows Project B Cash Flows 0 -$46,800 -$63,600 1 -21,600 20,400 2 43,200 20,400 3 43,200 20,400 4 43,200 20,400 5 -28,800 20,400 Sketch the NPV profile for projects A & B. Determine the crossover point for these projects’ NPV profiles.Q No. 3: M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below: period Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 30,000 40,000 4 30,000 25,000 Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. Which project(s) should be accepted if : (i) The projects are mutually exclusive and there is no capital constraint. (ii) The projects are independent and there is no capital constraint. (iii) The projects are independent and there is a total of $100,000 of financing for capital outlays in the coming period. c. Why the cost of capital for A might be higher than for B. State possible reason(s)
- Question Compute the IRR statistic for Project A and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 %. Time 1 2 3 4 5 Cash Flow ($92,000$42.999 $45,668 $38,554 $36,778 $47,000 O The project's IRR is 36.3 % and the project should be accepted. O The project's IRR is 65.5 % and the project should be accepted. O The project's IRR is 23.9 % and the project should be rejected.. O The project's IRR is 43.2 % and the project should be accepted.17. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B)0 −$291,000 −$41,6001 37,000 20,0002 55,000 17,6003 55,000 17,2004 366,000 14,000 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?which of the two projects, Project O and Project Y, should the company pursue? Why? The firm's cost of capital has been determined at 9% Project O Project Y Initilal Investment P50,000 P48 000 Cash Flows 1 P20,000 30,000 2 25,000 35,000 3 15,000 40,000 4 20,000 10,000
