The following information Company: available for a potential investment for Rose Initial investment P80,000 Net annual cash inflow 20,000 Net present value 36,224 Salvage value 10,000 Useful life 10 yrs. The potential investment's profitability index is A. 2.50 B. 2.85 C. 4.00 D. 1.45
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The following information Company: available for a potential investment for Rose
Initial investment P80,000
Net annual
Salvage value 10,000
Useful life 10 yrs.
The potential investment's profitability index is
A. 2.50
B. 2.85
C. 4.00
D. 1.45
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- A firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 132,716.00 Submit 549.00 2 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 21,093.60 Answer format: Currency: Round to: 2 decimal places. 3 132,716.00 132,716.00 132,716.00 549.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 4 62,780,00 62,780.00 62,780.00 30,000.00 549.00 21,093.60 549.00 5 132,716.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year) 30,000.00 21,093.60 549.00Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z $92,000 $92,000 $92,000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 90,000 2,000 47,500 0 3 years 46,000 46,000 47,500 0 3 years 92,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal Z Best proposal 0 x Z 0✔ X,Y 0 X X Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. Proposal X 0 x 0 x 0 x Proposal Y 0 x 0 x 0 x ◆ ◆ ◆ ✓Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal A Proposal B Proposal C $ 45,000 $ 45,000 $ 45,000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 40,000 5,000 22,500 22,500 22,500 22,500 0 0 3 years 3 years 45,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 12 percent.. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal A Proposal B Proposal C Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value: Round answers to nearest whole number. S
- 1. Consider the following investment projects: Year(n) Net cash flow Project 1 -$1,200 Project 2 -$2,000 1 600 1,500 2 1,000 1,500 IRR 19.65% 17.53% Determine the range of MARR for which Project 2 would be preferred over Project 1Part D: Investment Decisions Now consider that Luxio has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$34,000 $16,500 $14,000 $10,000 $6,000 Cash Flow (B) -$34,000 $5,000 $10,000 $18,000 $19,000. 1. What is the IRR for each of these projects? Based on IRR decision rule, which project should the company accept? 2. If the required return is 11%, what is the NPV for each of these projects? Based on the NPV decision rule, which project should the company accept? 3. Over what range of discount rates would the company choose project A? At what discount rate would the company be indifferent between these two projects? Explain.Data Review View Acrob Page Layout P19 F G D A Using the information provided in the following table, find the value of each asset. Cash Flow End of Amount Asset Year (Php) Appropriate Required Return (%) A 250,000 18 250,000 250,000 15,000 15 0 16 0 0 1,750,000 75,000 12 425,000 100,000 14 150,000 250,000 350,000 200,000 50.000 File dy B C F Home O 1 through 1 2 3 14 5 1 through 5 6 E 1 2 3 4 5 6 Solution and Answer: 123 Insert Shot on OnePlus Powered by Triple Camera Num Ette Formulas
- An investor has $10,000 invested in asset (X). His advisor recommend a new asset ( Y) for investment with following rate of returns and probabilities: X -10 5 15 Total -5 0.04 0.05 0.01 0.1 -10 0.05 0.05 0.05 0.15 Y 0 0.02 0.1 0.08 0.2 15 0.04 0.2 0.06 0.3 25 0.05 0.1 0.1 0.25 Total 0.2 0.5 0.3 1 a.) Do you agree with the advisor recommendation to invest in asset Y? Explain. b.) If the investor able to divide his money and put it in a new portfolio: $5,000 (50%) in asset (X) and $5,000 (50%) in asset (Y). Would you recommend the new portfolio? Explain.You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX 0 O $201.765 O $193,822 O $185,617 O $222,872 O $213,918 1 $127.000 $60,000 2 Depreciation Increase in NWC Year-end net debt $80,000 Cost of net debt = 8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0. using the APV method. $72,000 $50,000 $100,000 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138.500 $10,000 $84,000 $30,000 $140,000Information for two alternative projects involving machinery investments follows: Project 1 Initial investment Salvage value Annual income $ (128,000) Ө Project 2 $ (98,000) 18,000 14,080 11,600 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Numerator: Accounting Rate of Return Denominator: Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. = Accounting rate of return
- 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 MoreUsing the following two relationships: AW = CR + A of AOC CR = -P(A/P,i,n) + S(A/F,i,n) %3D Calculate the Annual Worth (AW) based on the data for the following project: Corporate MARR = 10% Initial Investment Cost $1,000,000 Anticipated Project Life = 10 years Salvage Value at the end of 10 years $100,000 Annual Cost of Operation %3D $50,000 10% Compound Interest FactorsA firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,163.00 104,285.00 1 125,285.00 2 62,893.00 62,893.00 20,857.00 125,285.00 30,000.00 30,000.00 526.00 526.00 3 125,285.00 4 125,285.00 30,000.00 30,000.00 20,857.00 20,857.00 20,857.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 62,893.00 62,893.00 62,893.00 526.00 5 526.00 125,285.00 30,000.00 20,857.00 526.00 The firm has a capital structure of 46.00% debt and 54.00% equity. The cost of debt is 10.00%, while the cost of equity is estimated at 13.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year)
