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- Consider the following list of projects: Project Investment ($) 135,000 200,000 125,000 150,000 175,000 75,000 80,000 A B C D E F G H O O Assuming that your capital is constrained, which investment tool should you use to determine the correct investment decisions? Incremental IRR IRR 200,000 50,000 Profitability Index NPV NPV ($) 6000 30,000 20,000 2000 10,000 10,000 9000 20,000 4000Suppose that you could invest in the following projects but have only $24,480 to invest. Which projects would you choose? Project Cost NPV w $ 7,970 $ 3,000 x 10,990 7,530 y 8,500 4,280 z 6,750 3,890 You should invest in project(s)?Refer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
- 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?Suppose that you could invest in the following projects but have only $29,670 to invest. How would you make your decision and in which projects would you invest? Project Cost NPV A $8,260 $4,300 BCD 10,850 6,470 9,070 4,830 7,170 3,940 You should invest in project(s) ERefer to the table below to answer the following question. Project Initial Investment NPV P 200 22 Q 180 26 R 185 38 S 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
- An NPV profile plots a project's NPV at various costs of capital, labeled "A" and "B" in the graph. A project's NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project. A-Z NPV (Dollars) 400 dofice 300 200 A 100 B -100 -200 0 2 4 6 8 10 12 14 16 18 20 COT OF CAPITAL (Percent) A WACC IRR The point at which the NPV profile intersects the horizontal axis represents theConsider the following list of projects: Project Investment NPV A $135,000 $13,500 200,000 30,000 C 150,000 25,000 D 175,000 20,000 Assuming that your capital is constrained, which project should you invest in last? O Project A O Project B O Project C O Project D. Suppose that your organization wants to decide which one of the given two projects can be selected for the development, as summarized in the following table. Calculate the Expected Monetary Value (EMV) for each project and suggest which project can be selected? Probability of occurrence of risk/opportunity (Impact) Estimated Profits/Losses Project 1 40% $140000 60% -$60000 Project 2 80% $40000 20% -$8000
- 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%?Suppose that you could invest in the following projects but have only $29,700 to invest. How would you make your decision and in which projects would you invest? Project Cost A $7,850 B C D 11,060 9,200 6,540 NPV $3,200 6,460 4,150 3,090 You should invest in project(s)An NPV profile plots a project's NPV at various costs of capital, labeled "A" and "B" in the graph. A project's NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project. NPV (Dollars) 400 300 200 100 B -100 -200 O 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) A В The point at which the NPV profile intersects the horizontal axis represents the
