PROJECT A PROJECT B Initial Outlay -60,000 -80,000 Inflow year 1 17,000 18,000 Inflow year 2 17,000 18,000 Inflow year 3 17,000 18,000 Inflow year 4 17,000 18,000 Inflow year 5 17,000 18,000 Inflow year 6 17,000 18,00
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PROJECT A PROJECT B
Initial Outlay -60,000 -80,000
Inflow year 1 17,000 18,000
Inflow year 2 17,000 18,000
Inflow year 3 17,000 18,000
Inflow year 4 17,000 18,000
Inflow year 5 17,000 18,000
Inflow year 6 17,000 18,000
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- There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.
- ( NPV and Pl calculations ) You are considering two independent projects in Birmingham and Manchester, respectively. The initial cash outlay associated with the Birmingham project is $550,000, and the initial cash outlay associated with the Manchester project is $750,000. The required rate of return on both projects is 13 percent. The expected annual free cash inflows from each project are as follows: Calculate the NPV and PI for each project and indicate if the project should be accepted. MANCHESTER BIRMINGHAM -$550,000 -$750,000 Initial outlay Inflow year 1 Inflow year 2 170,000 170,000 170,000 120,000 120,000 Inflow year 3 Inflow year 4 Inflow year 5 Inflow year 6 120,000 120,000 120,000 170,000 170,000 120,000 170,000(Paybackperiod, NPV, PI, and IRR calculations) You are considering a project with an initial cash outlay of $80,000 and expected free cash flows of $26,000 at the end of each year for 6 years. The required rate of return for this project is 7 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's PI? d. What is the project's IRR?(Net present value, profitability index, and internal rate of return calculations). You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $50,000 and the initial cash outlay associated with project B is $70,000. The required rate of return on both projects is 12 percent. The expected annual free cash flows from each project are as follows: YEAR PROJECT A PROJECT B 0 -$50,000 -$70,000 1 12,000 13,000 2 12,000 13,000 3 12,000 13,000 4 12,000 13,000 5 12,000 13,000 6 12,000 13,000 Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.
- There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,192 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $22,000 $5,000 $59,000 Beta Project 7,000 23,000 29,047 59,047 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project % Beta Project % B. Make a recommendation on which one to accept.There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,017 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $22,000 $4,500 $58,500 Beta Project 8,000 24,000 27,106 59,106 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank 1% Beta Project fill in the blank 2% B. Make a recommendation on which one to accept. .There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,665 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $31,500 $22,000 $4,500 $58,000 Beta Project 7,500 23,500 29,066 60,066 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank % Beta Project fill in the blank %
- There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,506 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $23,000 $5,500 $60,500 Beta Project 7,000 24,000 30,960 61,960 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank 1% Beta Project fill in the blank 2% B. Make a recommendation on which one to accept. Alpha .(Payback period, NPV, PI, and IRR calculations) You are considering a project with an initial cash outlay of $85,000 and expected free cash flows of $20,000 at the end of each year for 7 years. The required rate of return for this project is 9 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's PI? d. What is the project's IRR?There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial Investment of $34,474 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $23,000 $4,500 $59,000 Beta Project 23,500 25,457 56,957 A. Calculate the Internal rate of return on both projects. Use the IRR spreadsheet function to calculate Internal rate of return. $31,500 8,000 Alpha Project Beta Project B. Make a recommendation on which one to accept. Alpha •✓. %