Compute the benefit cost ratio of the following project: Project cost = P80 000 Gross Income = P25000/year Operating Cost = P6000/year Salvage value = 0 Life of project = 10 years %3D %3D %3D %3D Rate of interest 12% %3D
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- 1. Determine the B/C ratio for the following project First Cost P100, 000 Project life, years 5 Salvage value Annual benefits P10, 000 P60, 000 Annual O and M Interest rate, % P22, 000 15 Ans: B/C = 1.16 2. Data for two alternatives are as follows: Alternatives A В Investment Р35, 000 P50, 000 Annual benefits P20, 000 P25, 000 Annual O and M Estimated life, years Net salvage value Ре, 450 P13, 830 4 8. Р3, 500 Using an interest rate of 20%, which alternative should be chosen? Ans: Alternative A is referred over Alternative BCompute the IRR, NPV, Pi, and payback period for the following two projects. Assume the required return is 10%. Year Project A Project B 0 $-200 $-150 1 $200 $50 2 $800 $100 3 $-800 $150 Please show inputs from the BAII Plus Financial calculator of how to get these answers(c) Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Annual rate of return Project Bono % Project Edge % Project Clayton %
- The table below lists four mutually exclusive projects, Which project should be selected based on the equivalent annual net cost? Assume a 10% discount rate? Project A Project B Project C Project D Total Operating Cost (PV) Project D Project C Project A Project B Project life (years) 44000 37500 36000 32000 978 6 5Compute for the benefit ratio of the following projects. Project cost Gross income Operating cost Life of project Interest rate O a. 1.20 O b. 1.70 O c. 1.07 O d. 1.02 5,000,000 2,000,000 1,000,000 20 years 10%Compare the following two alternatives by the IRR method, given MARR of 6%/year. First find if they are feasible and then compare them with the incremental rate of return (AROR). Alt. Construction cost $ Benefits $/yr Salvage $ Service Life (yrs) A 410,000 55,000 20,000 11 B 250,000 35,000 10,000 11
- Calculate the NPV of a project under consideration with the following information: project life = 5 years; project cost = $1,500,000; unit sales = 25,000; unit price = $200; unit variable cost = $170; fixed costs = $250,000; tax rate = 34%; rate of return = 12%.1. Assuming monetary benefits of a construction project at $50,000 per year during year 1, 2, 3 and 5 (not year 4), one-time costs (initial investment) of $15,000, recurring costs of $35,000 per year (every year), a discount rate of 10 per cent, and a 5-year time horizon, calculate the net present value (NPV) of an information system's costs and benefits. Calculate the overall return on investment (ROI) of the project. During which year does break-even occur?. Use the NPV template provided (modify to suit your answer) and clearly display the NPV, ROI, and year in which payback occurs. Write a paragraph explaining whether you would recommend investing in this project based on your financial analysis. Explain your answer referring to the NPV, ROI and payback for this project. Discount Rate (10%) Year 0 - 1.0000 Year 1 - .9091 Year 2 - .8264 Year 3 - .7513 Year 4 - .6830 Year 5 - .62091. Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits P60, 000 Annual O and M P22, 000 Interest rate, % 15 Ans: B/C = 1.16
- Compute the (a) net present value, (b) internal rate of return (IRR), (c) modified internal rate of return (MIRR), and (d) discounted payback period (DPB) for each of the following projects. The firm’s required rate of return is 13 percent. Year Project AB Project LM Project UV 0 $(90,000) $(100,000) $ (96,500) 1 39,000 0 (55,000) 2 39,000 0 100,000 3 39,000 147,500 100,000 Which project(s) should be purchased if they are independent? Which project(s) should be purchased if they are mutually exclusive?a. Compute annual rate of return, Pay back period b NPV using 14% discounts rate , Is the Project acceptable using this discount rate Compute NPV using 11% discounts rate. Is the Project acceptable using this discount rateThe following information relates to machines A and B. Year Machine A Machine B Shs Shs 0 (100,000) (120,000) 1 60,000 50,000 2 40,000 50,000 3 20,000 50,000 Find the Internal Rate of Return (IRR) of the project at rates 10%)