Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget inwireless technology. It is considering investments in three different technologies todevelop wireless communication devices. Consider the following cash flows of the threeindependent projects available to the company. Assume the discount rate for all projectsis 9 percent. Further, the company has only $20 million to invest in new projects thisyear.Cash Flows (in millions)Year CDMA G4 Wi-Fi-$6-$ 14-$200111111728.5253333.52020a. Calculate the profitability index for each investment. (Do not round intermediatecalculations and round your answers to 2 decimal places, e.g., 32.16.)b. Calculate the NPV for each investment. (Do not round intermediate calculationsand enter your answer in dollars, not millions of dollars, rounded to 2 decimalplaces, e.g., 1,234,567.89)a. CDMA1.40a. G41.40a. Wi-Fi1.12b. CDMAb. G4b. Wi-Fi

Net present value refers to the method of capital budgeting used for evaluating the viability of the…

Hanmi Group, a consumer wireless technology. It is c develop wireless communica independent projects availab is 9 percent. Further, the co year. Cash Flows (in millions) Year CDMA G4 Wi-F 0 -$6-$ 14-$2 1 11 11 2 8.5 25 3 3.5 20 32 a. Calculate the profitability calculations and round y b. Calculate the NPV for eac and enter your answer in places, e.g., 1,234,567.89 a. CDMA a. G4 a. Wi-Fi b. CDMA b. G4 b. Wi-Fi

Hanmi Group, a consumer wireless technology. It is c develop wireless communica independent projects availab is 9 percent. Further, the co year. Cash Flows (in millions) Year CDMA G4 Wi-F 0 -$6-$ 14-$2 1 11 11 2 8.5 25 3 3.5 20 32 a. Calculate the profitability calculations and round y b. Calculate the NPV for eac and enter your answer in places, e.g., 1,234,567.89 a. CDMA a. G4 a. Wi-Fi b. CDMA b. G4 b. Wi-Fi

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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evis Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects. Assume the discount rate is 10 percent. Further, the company has only $18 million to invest in new projects this year. Cash Flows (in millions) Year L6 G5 Wi-Fi 0 −$ 6.0 −$ 12 −$ 18 1 9.0 10 16 2 5.5 25 30 3 3.5 18 18 Calculate the profitability index for each investment. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Calculate the NPV for each investment. Note: Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 11 percent. Further, the company has only $20 million to invest in new projects this year. Cash Flows (in millions) Year CDMA G4 -$7 -$13 10 6.5 4.5 0 1 2 3 11 26 20 a. CDMA a. G4 a. Wi-Fi b. CDMA b. G4 b. Wi-Fi Wi-Fi -$20 18 32 20 a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) O search Prev Saved LO+ 76 8 Next > M
Broxton Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects. Assume the discount rate is 8 percent. Further, the company has only $14 million to invest in new projects this year. Cash Flows (in $ millions) Year L6 G5 Wi-Fi 0 −$ 4.0 −$ 10 −$ 14 1 7.0 8 12 2 3.5 23 26 3 1.5 14 14 a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)
Rocor is considering the implementation of a lockbox collection system for its mid-western and western sales regions. Sales in those two regions are 30 percent of Tocor's annual sales of $560 million. The lockbox system will cost $187,000 a year and reduce collection by time by 3 days. If Tocor could invets any released funds at 10.85 percent, should it use the lockbox system and what would be the savings/loss. Assume 365 days per year.
2. Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering Investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three Independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $22 million to invest in new projects this year, Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 7 15 $ $15 1 2 3 a. CDMA G4 Wi-Fi b. CDMA a. Calculate the profitability Index for each Investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89) G4 Wi-Fi Year 0 1 2 3 12 9.5 4.5 12 26 22 Project Alpha -$6,300 $22 19 Show Transcribed Text 3,200 3.100 1,900 35 22 Project Alpha…
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Yea 1 3 Sales (Revenues) Cost of Goods Sold (50% of Sales) 125,000 125,000 62,500 25,000 37,500 125,000 62,500 25,000 62,500 25,000 Depreciation = EBIT - Taxes (20%) = unlevered net income + Depreciation + changes to working capital - capital expenditures 37,500 37,500 7,500 7,500 7,500 30,000 25,000 30,000 25,000 30,000 25,000 - 5,000 - 5,000 10.000 - 90,000
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Year 0 1 2 3 Sales (Revenues) 100,000 100,000 100,000 −Cost of Goods Sold (50% of Sales) 50,000 50,000 50,000 −Capital Cost Allowance 13,500 22,950 16,065 =EBIT 36,500 27,050 33,935 −Taxes (35%) 12,775 9,468 11,877 =Unlevered net income 23,725 17,582 22,058 +Capital Cost Allowance 13,500 22,950 16,065 +Changes to working capital −5,000 −5,000 −10,000 −Capital Expenditures −90,000 The free cash flow for the first year of Epiphany's project is closest to: A. $35,532 B. $45,000 C. $32,225 D. $25,000 E. $43,000
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Year Sales (Revenues) Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (20%) = unlevered net income - 0 OA. $37,500 OB. $60,000 OC. $50,000 O D. $70,000 1 125,000 62,500 25,000 37,500 7,500 30,000 25,000 - 5000 + Depreciation + changes to working capital - capital expenditures - 90,000 The free cash flow for the first year of Epiphany's project is closest to: 2 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000 3 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Year Sales (Revenues) Cost of Goods Sold (50% of Sales) Depreciation = EBIT 0 A. $66,600 B. $55,500 C. $59,200 D. $74,000 Taxes (20%) = unlevered net income + Depreciation + changes to working capital - capital expenditures The free cash flow for the last year of Epiphany's project is closest to: 1 150,000 75,000 20,000 55,000 11,000 44,000 20,000 - 5,000 - 90,000 2 150,000 75,000 20,000 55,000 11,000 44,000 20,000 - 5,000 3 150,000 75,000 20,000 55,000 11,000 44,000 20,000 10,000
Cullumber Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. \table[[Year, Cash Flow ], [0, $3,505, 700
Epiphany Industries is considering a new capital budgeting project that will last for three years. The projec Time left 1:29:41 initial investment of $90,000 in year 0. Epiphany plans on using an opportunity cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projections: Sales (Revenues) Cost of Goods Sold (50% of Sales) Depreciation EBIT Taxes (30%) Profit after tax Changes in NOWC The net present value (NPV) for Epiphany's Project is closest to: a. $39,000 b. $14,348 c. $29,400 O d. $35,364 Year 1 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 2 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 3 125 000 -62 500 -30 000 32 500 -9 750 22 750 -10 000
Tocor is considering the implementation of a lockbox collection system for its mid- western and western sales regions. Sales in those two regions are 30 percent of Tocor's annual sales of $560 million. The lockbox system will cost $187,000 a year and reduce collection time by 3 days. If Tocor could invest any released funds at 10.85 percent, should it use the lockbox system? Assume 365 days per year.

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