A project requires an investment of $2,500 and has a net present value of $430. If the internal rate of return is 10%, what is the profitability index for the project?
Q: Determine the average rate of return for a project that is estimated to yield total income of…
A: 1. Formula for average rate of return is = Average annual income or profit/ Initial investment2. To…
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A: Given:
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A: The average accounting return can be calculated as follows : Results obtained :
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Q: Cooper Industries is considering a project that would require an initial investment of P235,000. The…
A: Discount factor = initial investment / Annual cost savings = P235,000/P70,110 = 3.352
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A: Profitability Ratio The Profitability Index (PI) measures the ratio between the present value of…
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Q: Calculate the net present value (NPV) of the project.
A: Net Present Value: Net present value is the sum of discounted value of all the cash flows during a…
Q: what is the project's APV?
A: Adjusted Present Value (APV): APV represents the present worth of the project when financed with…
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A: Calculation of Profitability Index:The profitability index is 1.16.Excel Spreadsheet:
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A: Solution:- Payback period means that time period when the initial investment of the project gets…
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A: Given that;The cash flows are:Year 0: -$15,000Year 1: $3,000Year 2: $3,000Year 3: $3,000Year 4:…
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A: Future value is the future worth of cash flows that have occurred in the present or past.
Q: Determine the average rate of return for a project that is estimated to yield total income of…
A: Average rate of return = Average annual income / Initial investment where, Average annual income =…
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A: Given, Initial Investment = $50,000 Annual Expense = $10,000 Opportunity cost = 10%
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A: Present Value Present value is the present worth of any sum of a money to be received in the future…
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A: a. NPV is net present value i.e. sum of all cash flows discounted at cost of capital.
Q: Determine the average rate of return for a project that is estimated to yield total income of…
A: Annaul income = Total income / Total years = $356,400/4 years = $89,100 Residual value = Operating…
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A: Pay back period: Number of years required to payback amount invested in a project.…
Q: A project has an initial cost of P52,125, expected net cash inflows of P12,000 per year for 8 years,…
A: NPV is the difference between resent value of all cash inflows and initial investment. NPV =Present…
Q: Cooper Industries is considering a project that would require an initial investment of P235,000. The…
A: Solution: Initial investment = P235,000 Annual cost savings = P70,110
Q: A project has a NPV of 15,000 when the cutoff rate is 10%. The annual cash flows are 20,505 on an…
A: Profitability index is used to see the attractiveness of investment or a project. It is also written…
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- Giorgio Co. is looking at an investment project with an internal rate of return of 10.8%. The initial outlay for the investment is $90,000. The hurdle rate or minimum acceptable rate of return is 10.2%.A project has an investment cost of $200,000 and a profitability index of 1.6. What is the net present value of the project? NPV=A project has the following cash flows: Year Cash Flows 0 $ 128,200 12 1 2 3 4 49,400 63,800 51,600 28,100 The required return is 8.7 percent. What is the profitability index for this project? Multiple Choice 1.142 1.003 .803 1.038
- 3. You are considering a project that has an initial outlay of $1million. The profitability index of the project is 2.24. What is the NPV of the project?10. A profitability index (PI) of .92 for a project means that Select one: The project's NPV is greater than 1 The project returns £0.92 in present value for each current £1.00 invested The project's NPV is greater than zero The project's costs (cash outlay) are (is) less than the present value of the project's benefitsFind the internal rate of return for the following investment (yes I want the actual rate). Is it a good idea if MARR=10%? Year 2$ -160,400 75,000 -32,000 55,000 32,500 69,500 1 3 4
- You are considering a project that costs $30 and has expected cash flows of $11.00, $12.10, and $13.31 over the next three years. If the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project? Select one: a. $19.79 b. $64.10 c. The NPV is negative d. $0.00 e. $0.71Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B D - 25,000 - 35,000 - 40,000 -60,000 -75,000 9.6 27.3 9.4 35.3 25.0 В 15.1 38.5 24.4 13.4 46.5 27.3 - 25.4 6.8 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 5% per year, the best alternative is Select one: O a. E O b. A O c.D d. B ABCDEExplain how the internal rate of return and net present value are related. If a project has an NPV of $50,000 using a 10 percent discount factor, what does this imply about that project's IRR?
- A project has initial costs of $1,000 and subsequent cash inflows of $700, 200, 200 and 200. The company's 10% cost of capital is an appropriate discount rate for this average risk project. Calculate the following: 1. Payback Period 2. NPV 3. Profitability Index 4. IRR 5. MIRR Please number/label each of your answers as shown above. Be sure to show your TVM function calculator inputs, and four decimal places.Please answer the following questions using the information below: NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected? Consider the following cash flows: Year 0 1 2 3 4 5 6 Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600 Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected? Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected? IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?…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%