Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Based on your answer which project is better and why? please show the steps and formula Thanks

Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Based on your answer which project is better and why? please show the steps and formula Thanks

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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Salalah company management is considering two competing investment Projects A and B.YearInitial Investment 12345Project A 8000 2750 2750 2750 2750 2750Project B 8000 3000 3000 3000 3000 3000DISCOUNT RATE 5.05%Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
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es Lopez Company is considering three alternative investment projects below: Project 1 5.2 years $ 26,700 Project 2 5.7 Years $ 33,700 14.2% 13.1% Payback period Net present value Internal rate of return a. Payback period b. Net present value c. Internal rate of return. Which project is preferred if management makes its decision based on (a) payback period, (b) net present value, and (c) internal rate of return? Preferred Investment Project 3 4.9 Years Reason $19,700 12.5%
Comparing Investment Criteria [L01,2,3,5,7] Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$300,000 -$40,000 1 20,000 19,000 2 50,000 12,000 3 50,000 18,000 4 390,000 10,500 Whichever project you choose, if any, you require a 15 per cent return on your investment. a. If you apply the payback criterion, which will you choose? Why? b. If you apply the discounted payback criterion, which investment will you choose? Why? c. If you apply the NPV criterion, which investment will you choose? Why? d. If you apply the IRR criterion, which investment will you choose? Why? e. If you apply the profitability index criterion, which investment will you choose? Why? f. Based on your answers in (a) through (e), which project will you finally choose? Why? Please explain your calculations and conclusions
Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment Project A Project B 12000 4150 5260 Project C 12000 12000 1200 3100 5225 3 4 Assume a discount Rate of 5.45 % 3800 4600 7360 9460 8250 9275 9300 Use the information above and help the management in choosing the most desirable Project using Payback period
Lopez Company is considering three alternative Investment projects below: Project 2 4.8 Years Project 1 4.3 years $ 25,800 13.3% Payback period Net present value. Internal rate of return a. Payback period b. Net present value c. Internal rate of return $ 32,800 Preferred Investment 12.2% Project 3 4.0 Years Which project is preferred if management makes its decision based on (a) payback period, (b) net present value, and (c) Internal rate of return? Reason $ 18,800 11.6%
company management is considering three competing investment Projects A, B & C Project A 10000 Year Initial Investment Project B 10000 Project C 10000 1100 4160 6225 1 2 3100 5260 8250 3800 7360 9275 4 4600 9460 9300 Assume a discount Rate of 4.05% Use the information above and help the management in choosing the most desirable Project using Payback period, Discounted payback Net Present value and Profitability Index. Out of the four methods which is considered to be the most desirable. Explain
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Asgnment Exercise A1) Salalah company management is considering two competing investment Projects A and B. Project A 1000 Project B 1000 Year Initial Investment 1 275 300 275 300 3 275 300 4 275 300 275 300 DISCOUNT RATE 3.15% Q1) Use the information below and help the management in choosing the most desirable Project using all the following technique: Payback Period Technique. 1) Discounted Payback Period Technique. 2) Net Present Value Technique 3) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
NPV and project selection Project A Project B initial investment -50000 -60000 Year 1 5000 4000 Year 2 6000 7000 Year 3 7000 14000 Year 4 9000 13000 Year 5 4000 4000 Year 6 9000 9000 Year 7 5000 10000 Year 8 8000 8000 Year 9 9000 9000 Year 10 5000 7000 Calculate the NPV of each project with a 4% discount rate. Which project(s) will be undertaken if all are mutually exclusive (still 4% discount)? Which project(s) will be undertaken if all are independent and the firm only has $125k in available capital (still 4% discount)? Which projects will be undertaken if all are independent and the firm’s cost of capital is 3%? Please do in Excel and show steps