Fin 550 Milestone 3

this is Capital budgeting tools ch 12 p 25 build a model

Relevant Cash Flow Data for Year 2:Sales revenues Year 2 $100,000Cost of Goods Sold 20,000Depreciation Expense 10,000Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000

Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?

Year Project 1 Net Cash Flows Project 2 Initial investment $(60,000) $(55,500) 1. 2. 15,000 35,000 27,400 3. 22,000 15,000 22,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute net present value for each project. Based on net present value, which project is preferred? Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar. Net Cash Flows Present Value Present Value of Net Factor Cash Flows Project 1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project 2 Year 1 Year 2 Year 3 Totals Initial investment $ 0 $ 0 $ 0 $ 0 $ 0 Net present value Based on net present value, which project is preferred? $ 0

D, E, F, G, need to be solved

Question Content Area A project is estimated to cost $273,840 and provide annual net cash inflows of $60,000 for 7 years. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 6 4.917 4.355 4.111 7 5.582 4.868 4.564 8 6.210 5.335 4.968 9 6.802 5.759 5.328 10 7.360 6.145 5.650 Determine the internal rate of return for this project by using the above present value of an annuity table.fill in the blank 1 of 1%

Baltusrol Inc. has the following three investment opportunities. A P70,000 10,000 B Initial investment Initial working capital required Cash inflows by year: Year 1 P70,000 5,000 P70,000 8,000 P35,000 35,000 10,000 5,000 8,000 P83.000 P1,250 P35,000 10,000 45.000 20,000 2,000 P112.000 P10,000 P4,000 8,000 10,000 98,000 5.000 P125.000 P12,500 Year 2 Year 3 Year 4 Released working capital Total Average annual income Required: 1. Rank the investment opportunities in order of desirability using. A. Payback period. B. Average book rate of return (use average net book value of the investment as the denominator), and C. NPV using a 16% discount rate. 2. Determine the profitability index for each opportunity and rank the investments based on these values.

Clearcast Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: Operating Income Net Cash Flow Investment Year Proposal A: $450,000 $ 30,000 1 $120,000 2 30,000 120,000 3 20,000 110,000 4 10,000 100,000 (30,000) $ 60,000 $ 60,000 40,000 60,000 $510,000 $100,000 Proposal B: $200,000 1 80,000 3 20,000 60,000 4 (10,000) 30,000 (20.000) $ 90,000 20.000 $290,000 (Continued)

Question 1 Investment of RM820,000 in new machine to expand production capacity is being consideration by a company. Following are the budgeted cash flows given for next 6 year 1st year 2nd year 3rd year 4th year 5th year 6th year cash flow 80 110 160 250 220 180 1. Calculated discounted payback period Discount factors at the cost of capital of 10% per annum 1st year 2nd year 3rd year 4th year 5th year 6th year 0.909 0.826 0.751 0.683 0.621 0.564 Please donot provide solution in image format provide solution in step by step format and fast solution

-2 CAPITAL BUDGETING CRITERIA You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected net cash flows are as follows: 1 2 3 + $6,500 $3,500 + $3,000 $3,500 Project X -$10,000 $3,000 $3,500 $1,000 $3,500 Project Y -$10,000 a. Calculate each project's NPV, IRR, MIRR, payback, and discounted payback. b. Which project(s) should be accepted if they are independent? Which project(s) should be accepted if they are mutually exclusive? d. How might a change in the WACC produce a conflict between the NPV and IRR rankings of the two projects? Would there be a conflict if WACC were 5%? (Hint: Plot the NPV profiles. The crossover rate is 6.21875%.) e. Why does the conflict exist? C.

Capital budgeting criteria

eBook A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:   0 1 2 3 4 5                             Project M -$3,000 $1,000 $1,000 $1,000 $1,000 $1,000 Project N -$9,000 $2,800 $2,800 $2,800 $2,800 $2,800 Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent.Project M:    $  Project N:    $   Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.Project M:       %Project N:       % Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.Project M:       %Project N:       % Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.Project M:      yearsProject N:      years Calculate discounted payback for each project. Do not round…

Capital Budgeting   Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.     Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0   Calculate the payback period and discounted payback period for projects A & B.

Capital Budgeting   Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.     Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0     Sketch the NPV profile for projects A & B.

Capital Budgeting   Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.     Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0     Under what conditions on the cost of capital should project B be preferred to project A?

Capital Budgeting   Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.     Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0     If Project A and Project B are independent, which project should be undertaken?

Capital Budgeting   Assume you are evaluating two mutually exclusive projects, the cash flows of which appear below and that your company uses a cost of capital of 12% to evaluate projects such as these.     Time Project A Cash Flows Project B Cash Flows 0 -$300,000 -$405,000 1 -387,000 134,000 2 -193,000 134,000 3 -100,000 134,000 4 600,000 134,000 5 600,000 134,000 6 850,000 134,000 7 -180,000 0     Calculate the IRR and MIRR of projects A & B. Assume a reinvestment rate of 12% for the calculation of MIRR.

Question list ✔Question 1 Data table A 1 2 Projected cash outflow 3 Net initial investment 4 Projected cash inflows 5 Year 1 6 Year 2 7 Year 3 8 Year 4 9 Required rate of return ↑ Lulus Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lyssa Bickerson, staff analyst at Lulus, is preparing an analysis of the three projects under consideration by Caden Lulus, the company's owner. (Click the icon to view the data for the three projects.) Present Value of $1 table Read the requirements. B Project A с Project B Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table D Project C $ 6,000,000 $ 4,000,000 $8,000,000 8% $ 2,050,000 $ 1,100,000 $4,700,000 2,050,000 2,300,000 4,700,000 2,050,000 700,000 50,000 2,050,000 25,000 8% 8% Requirements 1. Because the company's cash is limited, Lulus thinks the payback method should be used to…

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Capital Budgeting Decisions EXERCISE 13-7 Net Present Value Analysis of Two Alternatives LO13-2 Perit Industries has $100,000 to invest. The company is trying to decide between two alternative ne. uses of the funds. The alternatives are: a ce y Project A Project B Cost of equipment required .. Working capital investment required Annual cash inflows .. Salvage value of equipment in six years Life of the project . $100,000 $0 ... $0 $100,000 $21,000 $8,000 $16,000 $0 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Required: 1. Compute the net present value of Project A. . Compute the net present value of Project B. 3. Which investment alternative (if either) would you recommend that the company accept?

Data for Fun 4 All, Inc.'s capital budgeting projects: Project 1 2 3 WACC 10% 10% 10% NPV 500 550 -300IRR 11% 10.50% 9% Based on these data, knowing that these projects are INDEPENDENT, you would choose project A.Project 2 B.Project 3 C.Project 1 D.Project 1 and 2.