Description Capital investment Project life Datu $1,200,000 25 years Incremental annual benefits $250,000 Incremental annual costs $100,000 Salvage value $50,000 Discount rate 6%
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A city government is considering increasing the capacity of the current wastewater treatment plant. The estimated financial data for the project are as follows:
What would be the benefit-cost ratio for this expansion project?
(a) 3.26
(b)3.12
(c) 1.30
(d) 2.23
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- Q2C) Use Incremental benefit cost analysis method to compare between the following three projects. Use i=9%/yr.: Project Project A Project C Project D Item Annual Benefits to $10,000 $6,000 $8,000 pablic Annual Disbenefits $2000 $3,000 $1,500 to public Capital Investment $20,000 $15,000 $14,000 Annual Operational $1,000 $1,800 $2.000 Cost Useful Life 10 years 12 years 15 yearsThe two projects are as follows. Discount rate = 10%. Project X Project Y Year Cash-Flow Cash-Flow 0 -$100,000 -$100,000 1 50,000 10,000 2 40,000 30,000 3. 30,000 40,000 4 10,000 60,000 Calculate the NPV of project X $6,032.99 $4,239.20 $7,881.98 $4,917.70 Calculate IRR of project X. 19% 49% 79% 59% Calculate the payback period of project X 33 years 33 years 33 years 33 years Calculate the crossover rate. 93% 58% 00% 17%What is the project's MIRR? r = 10.00% 0 Year Cash flows O a. 22.51% O b. 11.75% O c. 17.21% O d. 14.81% O e. 15.65% -$875 1 $300 2 $320 3 $340 $360
- Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 16%. Use this information for the next 3 questions. Year Project A Cash Flow Project B Cash Flow ($50,000) ($20,000) 15,000 6,000 15,000 6,000 3 15,000 6,000 4 13,500 5,400 13,500 5,400 6,750 5,400A Project with a net investment of $10,000 and net cash flows of $5,000, $4,000, $3,000, $2,000, $1,000 for years 1 through 5 has an internal rate of return of __________ percent. a. 20.27 b. 19.5 c. 18.45 d. 23.5The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project. E (Click the icon to view the projects information.) Requirements 1. Rank the four projects in order of preference by using the a. net present value. d. payback period. 2. Which method(s) do you think is best for evaluating capital investment projects in general? Why? c. internal rate of return. b. project profitability index. e. accounting rate of return. Requirement 1. Rank the projects in order of preference. (a) (b) (c) (d) (e) Net Present Profitability Internal Rate Payback Accounting Rate Value Index of Return Period of Return 1st preferred A C 2nd preferred 3rd preferred C 4th preferred ADB D AB
- Year Investment A 2016 $400.000 2017 $400.000 2018 $400.000 2019 $400.000 2020 $400.000 Investment B $100.000 $100.000 $100.000 $1.000.000 $1.000.000 calculate the Npv of both projectDiscount Rate 12% Investment Project Cash Flow Total Net Cash Flow Initial Investment $ (8,000) ? Year 1 $ 800 ? Year 2 $ 900 ? Year 3 $ 1,500 ? Year 4 $ 1,800 ? Year 5 $ 3,200 NPV of investment $ ? Estimated Payback Period ? Estimate the total net cash flows, NPV of Investment and Estimated Payback Period using the excel's formula.Investment required Present value of cash inflows - Net present value Life of the project. Internal rate of return 1 Required 1 $ (270,000) 336,140 $ 66,140 Project 6 years 18% Complete this question by entering your answers in the tabs below. Required 2 Compute the profitability index for each investment project. Note: Round your answers to 2 decimal places. Profitability Index 2 $ (450,000) 522,970 $ 72,970 Project Number 3 years 19% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return. 3 $ (360,000) 433,400 $ 73,400 12 years. 14 $ (480,000) 567,270 $ 87,270 6 years 16%
- Compute 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%How do you calculate the NPV and IRR Project 1 Year Cashflows Discount Rate 10% 0 $ (750,000.00) 1 $ 250,000.00 2 $ 300,000.00 3 $ 350,000.00 4 $ 200,000.00 5 $ 100,000.00 Project 2 Year Cashflows Discount Rate 10% 0 $ (1,000,000.00) 1 $ 200,000.00 2 $ 300,000.00 3 $ 400,000.00 4 $ 500,000.00 5 $ 700,000.00Project 20 yearMachinery cost 200MDeprecated over 20 yearBV 20MWorking Capital 25MCompany spend 20M in project servey and feasibility study Anuual revenue 40MAnnual expens 10MMV=30MTax 20% a. Calculate net initial investment b. Calculate net operating cash flow c. Calculate net salvage value. d. Calculate internal rate of return (or approx. IRR) for the project. e. Is the project financially viable? Justify