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- How I resolve this problems please give me the detail A firm has the following investment alternatives: Year A B C 1 $400 $--- $---- 2 400 400 ---- 3 400 800 ---- 4 400 800 1,800 Each investment cost of capital is 10 percent a. What is each investment's internal rate of return? b. Should the firm make any of theses investment? C. What is each investemtn's net present value? d. Should the firm make any of these investmentSuppose the MARR is 12%. Use the following table to answer the question-The IRR on the CMS Investment is FMS Initial Investment Annual Revenue Useful Life (Years) A. 17.0 % - 18.0% OB. 15.0 % - 16.0% OC. 11.0% - 12.0% O D.0.5% -1.0% O E.20.0% -21.0% CMS $20,000 6,688 $29,000 9,102.5ו Comparing Investment Criteria. onsiuer uie 1onOwing two inutuany exclusive projects: Cash Flow (B) 1TT Year Cash Flow (A) S415,000 -$3,500 49,000 1,920 57.000 1,390 74,000 1,420 530,000 1,050 4 Whichever project you choose, if any, you require a 13 percent return on your investment. a. If you apply the payback criterion, which investment will you choose? Why? b. If you apply the NPV criterion, which investment will you choose? Why? 8If you apply the IRR criterion, which investment will you choose? Why2 d. If you apply the profitability index criterion, which investment will you choose? Why? e. Based on your answers in (a) through (d), which project will you finally choose? Why?
- Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months and days). 5.2 Net Present Value of Project Tan.5.3 Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). INFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you: PROJECT COS PROJECT TANNet Profit Net ProfitYear R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculatedusing the straight-line method.Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $130,900. Project 2 requires an initial investment of $97,200. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net present value Years 1-5 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 2 Present Value Net Cash Flows x of Annuity at 10% Present Value Net Cash Flows x of Annuity at 10% = = Project 1 $ 105,300 70, 200…ch A project with an initial investment of $88000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $71025. O $98560. O $88000. O $109032. Save for Later O Et V B 21 E 7 Attempts: 0 of 1 used Submit Answer F12
- The management of Revco Products is exploring four different investment opportunities. Information onthe four projects under study follows:Project Number1 2 3 4Investment required ....................... $(270,000) $(450,000) $(360,000) $(480,000)Present value of cashinfl ows at a 10%discount rate .............................. 336,140 522,970 433,400 567,270Net present value .......................... $ 66,140 $ 72,970 $ 73,400 $ 87,270Life of the project ........................... 6 years 3 years 12 years 6 yearsInternal rate of return ..................... 18% 19% 14% 16%The company’s required rate of return is 10%; thus, a 10% discount rate has been used in the present valuecomputations above. Limited funds are available for investment, so the company can’t accept all of theavailable projects.Required:1. Compute the project profitability index for each investment project.2. Rank the four projects according to preference, in terms of:a. Net present valueb. Project profitability…Which of the following statement is true? * IRR and discount rate all have the same meaning.... If BCR is less than zero, an investment to a conservation project is worthwhile.... Both of them are trueCalculate the HPR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Period Cashflow 0 -14100 1 3300 2 3300 3 3100 4 2800
- Ue 45%. What was the llates (including total sales) were exactly correct Apense ratio, which actually turned out to be 45%. What was the excop project's actual simple rate of return? EXERCISE 13-1 Payback Method LO13-1 The management of Unter Corporation, an architectural design firm, is considering an investment connect Graw with the following cash flows: Year Investment Cash Inflow 1 ... $15,000 $8,000 $1,000 $2,000 2 ... 3.. $2,500 $4,000 $5,000 $6,000 $5,000 $4,000 5.. 6.. 7 .. 8 .. $3,000 9... $2,000 10 ... Required: 1. Determine the payback period of the investment. - Would the payback period be affected if the cash inflow in the last year were several times as large? EXERCISE 13-2 Net Present Value Analysis LO13-2 the purchase of a $27,000 machine thatFor the four revenue alternatives below, use the ROR method results to answer the question below Alternative A B с D Initial Investment, $ -60,000 -90,000 -140,000 -190,000 Alternative D Overall ROR, Ai*% When Compared with Alternative ¡*% A B с 11.7 22.2 17.9 15.8 43.3 22.5 17.8 10.0 10.0 Problem 08.034.c- Choose from more than two alternatives based on incremental ROR analysis ✓should be selected. 10.0 Which one should be selected if the MARR is 10% per year and the alternatives are mutually exclusive?Find the IRR for an investment that has an initial outlay of 25,000 and is expected to achieve 30,000 after 7 years. O a. 1.4% Ob. 2.6% O c. 3.1% Od. 4.8% O e. None of the above Next page