Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5]Oxford Company has limited funds available for investment and must ration the funds among the four competing projects shownbelow:ProjectInvestmentRequiredPresentValue of CashLife oftheProjectInternalRateInflowsABL$ 160,000$ 259,323(years)7of Return16%$ 135,000$ 232,0001218%C$ 100,000$ 190,035722%D$ 164,000$ 268,136317%The net present values above have been computed using a 10% discount rate.Required:1. Compute the profitability index for each project.2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.Complete this question by entering your answers in the tabs below.Required 1 Required 2Compute the profitability index for each project.Note: Round your answers to 2 decimal places.ProfitabilityProjectIndexABCD

Solution 1 :- Computaion of Profitability Index for each Project :-Profitability Index = Present…

Answered: Exercise 14-11 (Algo) Preference…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 19PROB

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Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (390,000) $ (30,000) $ (40,000) $ (600,000) Present value of cash inflows 551,000 41,000 64,100 800,000 Net present value $ 161,000 $ 11,000 $ 24,100 $ 200,000 Life of the project 5 years 7 years 6 years 6 years Required: 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference.
Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Required: Investment Profitability Proposal Index A B C D A $ (60,000) 88,600 $ 28,600 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. Rank Preference 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 years 6 years D $(2,660,000) 3,551,000 $ 891,000 6 years
Exercise 12-11 (Algo) Preference Ranking of Investment Projects [LO12-5] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project A B C D Investment Required $ 130,000 $ 136,000 $ 105,000 $ 169,000 Present value of Cash Inflows $ 249,323 $ 222,000 $ 180,035 $ 258, 136 Required 1 Required 2 Project Life of the Project (years) 7 The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. A B C 12 Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. 7 3 Complete this question by entering your answers in the tabs below. Profitability Index Internal Rate of Return 20% 18% 19% 17% Compute the profitability index for each project.…
Preference Ranking of Investment Projects Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Net Present Value Life of the Project (years) Internal Rate of Return (percent) A $160,000 44,323 7 18% B $135,000 42,000 12 16% C $100,000 35,035 7 20% D $175,000 38,136 3 22% The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth.
Exercise 14-1 (Algo) Payback Method [LO14-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 60,000 $ 4,000 2 $ 3,000 $ 8,000 3 $ 16,000 4 $ 17,000 5 $ 20,000 6 $ 18,000 7 $ 16,000 8 $ 14,000 9 $ 13,000 10 $ 13,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large?
Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Profitability Proposal Index A BUD В с D $ (280,000) 393,900 $ 113,900 Required: 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Rank Preference. 5 years Investment Proposal C $ (50,000) 78,100 $28,100 B $ (140,000) 192,800 $ 52,800 7 years 6 years D $ (780,000) 1,038, 100 $ 258, 100 6 years.
Exercise 12-14 (Algo) Comparison of Projects Using Net Present Value [LO12-2] Labeau Products, Limited, of Perth, Australia, has $15,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Invest in Project X Invest in Project Y Investment required $ 15,000 $ 15,000 Annual cash inflows $ 5,000 Single cash inflow at the end of 6 years $ 36,000 Life of the project 6 years 6 years The company’s discount rate is 16%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept?
Self-Study Problem 10.02 a1-a2 (Part Level Submission) Cullumber Crafts Corp. management is evaluating two independent capital projects that will each cost the company $250,000. The two projects will provide the following cash flows: Year Project A Project B 1 $88,750 $26,450 91,450 80,125 30,235 145,250 4 139,655 88,110 (a1) X Your answer is incorrect. Try again. What is the payback period of both projects? (Round answers to 2 decimal places, e.g. 15.25.) The Payback of Project A is years and Project B is years.
Problem 13-11 MIRR (LG13-4) Compute the MIRR statistic for Project I if the appropriate cost of capital is 12 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project I Time: Cash flow: 0 1 -$11,600 $5,630 $4,480 2 3 $1,820 4 $2,300 MIRR % ces Should the project be accepted or rejected? O rejected accepted
Exercise 12-1 (Algo) Payback Method [LO12-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year 1 2 3 4 5 6 7 8 9 10 Investment Cash Inflow $ 3,000 $ 6,000 $ 12,000 $ 13,000 $ 61,000 $ 5,000 $ 16,000 $ 10,000 $ 8,000 $ 10,000 $9,000 $ 9,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Check my work Complete this question by entering your answers in the tabs below.
11:52 Investment Appraisal (Year 2 Column 2... £393,460 7. Based on NPV which project would you ассept? Net Cash F Net Cash F Net Cash F Project 2 (110,000) (105,000) 35,000 35,000 Project 3 (116,000) 40,000 40,000 40,000 40,000 40,000 84,000 Project 1 Year 0 Year 1 25,000 Year 2 20,000 Year 3 35,000 35,000 Year 4 35,000 35,000 70,000 45,000 Year 5 35,000 50,000 Project 1 Project 2 Project 3 8. When calculating NPV will using a higher discount factor lead to ...? Activity Chat Teams Assignments More
Exercise 12-5 (Algo) Preference Ranking [LO12-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Profitability Proposal Index A B C D A $ (60,000) 88,600 $ 28,600 Rank Preference 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 Required: 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. 7 years 6 years D $ (2,660,0 3,551,0 $ 891,0

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