Template-Assignment 2-Week8
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School
University of Technology Sydney *
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Course
48250
Subject
Finance
Date
Apr 3, 2024
Type
xlsx
Pages
30
Uploaded by DoctorMetalElk31
Group Number: Student ID- Name
13197140 - Dean Thill
24866600 - Chenfeng Ma
24866586 - Ruihan Gao
24901872 - Mutian Shangguan
24901819 - Botu Li
Allocated task for data collection
Topic of the project
Allocated task for calculation or settin the CBA and assumption tables
Calculate and explain Financial Evaluation.
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This sheet is about your project
Title of the project
Project Description
Alternative A
Alternative B
The Harbourside Shopping Centre Item run by the Mirvac group.
Mirvac Group plans to conduct a comprehensive renovation of the seaside shop
commercial success. The shopping center is located in the coastal area, and its age. However, compared to complete redevelopment, Mirvac Group believes tha
more cost-effective approach. Recent comments have pointed out that the curre
considered a "tired travel trap", and has "passed its lifespan". This means that s
themselves to meet the needs of modern consumers. In order to achieve this go
following plan:
Modern facilities: The shopping center will undergo a comprehensive facility upg
decoration of the store, improving the comfort of the shopping environment, an
navigation systems. This will provide customers with a more enjoyable shopping
Solar panels: In order to reduce operating costs and reduce environmental impa
panels on the roof of shopping centers. This will help provide green energy, redu
provide sustainability for shopping centers.
Business strategy reshaping: Mirvac Group will reassess the business strategy o
merchants and brands to attract a wider customer base. They will also seek to p
dining experiences to make the shopping center a hub for social and cultural ac
Improving sustainability: In addition to solar panels, shopping centers will also a
such as waste management and water-saving schemes, to reduce environmenta
Through these measures, Mirvac Group hopes to improve the image of shopping
attractiveness, maintain the value of their investment portfolio, and ensure that
the future. This plan not only focuses on business success, but also on sustainab
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Mirvac Group plans to conduct a comprehensive reconstruction of the seaside s
residential and commercial office project. Based on feedback from week five, we
to redevelop this location but develop it into an office/residential space. The pro
rebuild the site into a low to mid level building and provide independent office/r
location of the seaside shopping center is considered a highly advantageous loc
situation include its seaside location, proximity to multiple transportation hubs (
and location very close to the Central Business District. Considering the decline development towards online shopping, Mirvac's investment in redeveloping this
future seems pointless. Redeveloping it as a dedicated residential space or rent
meaningful (already included in the plan). This will provide greater flexibility for
plan includes the following aspects:
Residential space: The shopping center will be redesigned as a low to mid story units. These units will benefit from their unique geographical location, enjoying convenient transportation connections.
Commercial office space: Some shopping centers will be converted into modern
growing business needs. These spaces will attract companies to seek highly acc
locations.
Flexibility and Sustainability: Mirvac will ensure that the project has flexibility to
on sustainability, adopting green buildings and energy-saving measures to redu
By transforming shopping centers into residential and commercial office project
advantageous geographical location, diversify its investment portfolio, and ensu
changing business environment. This plan emphasizes Mirvac's strategic vision
This sheet is about assumptions that you wil
The following template is an indicative one, and it can be
Assumptions- Alternative A
Values
Capital Cost
$137,092,307.69 Operating cost
$20 million - $35 million annually
Maintanace cost
$20 million - $35 million annually
Benefits
$35.6million - $56.7million per year
Salvage value
$79,357,259.69 Discount rate
5.47%
Project life
75
Values
Capital Cost
$2 billion
Operating cost
$20 million - $40 million annually
Maintanace cost
$20 million - $40 million annually
Assumptions- Alternative B
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Benefits
Salvage value
Discount rate
8%
Project life
50years
$62.22 million to $82.72 million annually
$400 million (This is a very rough estimate as property values could appreciate).
ll use for the CBA analysis (P
e modified as needed
What elements are included in this calculation
Land acquisition costs.This includes the cost of purchasing and clearing existing land, as well as potential land taxes and license fees that may need to be paid.Building development costs. This includes the construction costs of buildings, infrastructure, and public spaces, including design, construction, decoration, and equipment.Financing costs.including loan interest, financing fees, loan handling fees, etc.
The various taxes and wages required for the operation of shopping centers include a series of infrastructure costs such as water, electricity and gas required for construction.
Maintenance costs include fixed annual payments for utilities and gas. There is also the maintenance cost of the annual renovation of the mall's equipment.
Annual maintenance costs, operating costs, and all revenue for that year
All the capital invested in the initial phase of the project, the capital that the project needs to consume each year after the initial investment.
The annual fixed cost plus all the debt. And all income plus current assets each year.
The life of the building materials, the service life and the local land environment limit the size of the shopping mall.
What elements are included in this calculation
The text mentions a "$2 billion revitalization project" for the Harbourside mixed-use precinct. This could be considered the overall capital cost for the project.
utilities, salaries of employees, security, cleaning, landscaping, and other day-to-day operations of the precinct
refurbishment, equipment replacements, and infrastructure upkeep
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1. Commercial Space(Assuming a rental rate for premium commercial space in Sydney (based on previous years' data until 2022), the price could be around AUD $800 to $1,200 per square meter annually) 2.Residential Space(265 luxury apartments, assuming we can sell 50 units in the first year,and we assume each apartment is sold for an average of AUD $2 million (a conservative estimate for luxury apartments in Sydney's prime locations).3.Retail Space(assuming a rental rate of AUD $1,000 to $1,500 per square meter annually). 4.Public Domain Funding and Art Activation 5.Public Open Spaces
this is a large real estate development, its value might appreciate over time rather than depreciate
In real estate, a typical discount rate might range from 6-12%. However, given this is a significant urban project with government involvement, let's assume a modest discount rate.
The project life might be based on the expected lifespan of the buildings and infrastructure. Large-scale mixed-use developments are often designed to last several decades.
Provide the detail) for both Alternatives Source of dataset
https://www.urban.com.au/news/nsw/harboursi
https://www.urban.com.au/news/nsw/
harbourside-shopping-centre-in-darling-harbour-
listed-for-250m-plus
P.s.https://www.ipcn.nsw.gov.au/cases/2021/04/
harbourside-shopping-centre--darling-harbour & https://www.planningportal.nsw.gov.au/major-
projects/projects/harbourside-shopping-centre-
redevelopment
https://www.urban.com.au/news/nsw/harboursi
https://www.urban.com.au/news/nsw/harboursi
P.s.https://www.ipcn.nsw.gov.au/cases/
2021/04/harbourside-shopping-centre--
darling-harbour & https://www.planningportal.nsw.gov.au/major-
projects/projects/harbourside-shopping-
centre-redevelopment
Source of dataset
P.s.https://www.ipcn.nsw.gov.au/cases/
2021/04/harbourside-shopping-centre--
darling-harbour & https://www.planningportal.nsw.gov.au/major-
projects/projects/harbourside-shopping-
centre-redevelopment
https://www.mirvac.com/en/about/news-and-m
These details haven't been provided, but we can make a rough assumption. For a large-
scale mixed-use precinct, annual operating costs could be in the ballpark of 1-3% of the capital cost.
Also no details ,assuming 1-2% of the capital cost annually might be reasonable.
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REA Group (realestate.com.au) JLL Australia (jll.com.au) CBRE Australia (cbre.com.au) Reserve Bank of Australia (rba.gov.au)
https://www.investopedia.com/terms/s/salvage
https://www.investopedia.com/ https://www.wbdg.org/resources/life-cycle-asse
This sheet is about the cash-flow a
CBA- Ailternative A
Year
Income statement
+Revenue
-manufacturing and O&M cost
-Depreciation
-Debt interest
Taxable income
-Income tax
Net income
Cash flow statement
Operating activities
+Net income
+Depreciation
Investing activities
-Capital investment
+Salvage value
-Gains tax
+Losses (on Depreciable Assets)
-investment in working Capital
Working capital recovery
Financing activities
+Borrowed Funds
-Repayment of principal
Net cash flow
Financial Evaluation
PB
NPV
BCR
CBA- Ailternative B
Year
Income statement
+Revenue
-manufacturing and O&M cost
-Depreciation
-Debt interest
Taxable income
-Income tax
Net income
Cash flow statement
Operating activities
+Net income
+Depreciation
Investing activities
-Capital investment
+Salvage value
-Gains tax
+Losses (on Depreciable Assets)
-investment in working Capital
Working capital recovery
Financing activities
+Borrowed Funds
-Repayment of principal
Net cash flow
Financial Evaluation
PB
NPV
BCR
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and the calculation of the financial indicators for both A
method of calculation
$Manufacturing\ and\ O&M\ Cost$
$Depreciation = \frac{Capital\ Cost}{Project\ Life}$
$Debt\ Interest = Capital\ Cost \times Discount\ Rate$
$Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere
$Income\ Tax = Taxable\ Income \times Tax\ Rate$
$Net\ Income = Taxable\ Income - Income\ Tax$
Obtained from Income Statement
$Capital\ Investment = Capital\ Cost$
$Salvage\ Value$
$Gains\ Tax = \frac{(Capital\ Investment - Salvage\ Value)}{Project\ Life}$
$Losses = Depreciation$
Annual capital recovery amount=(investment cost residual value)/project life
Assuming that 10% of the borrowed funds need to be repaid annually as principal repayment
Values
0.3432
$78,471,460.53 $1.23
method of calculation
$Manufacturing\ and\ O&M\ Cost$
$Depreciation = \frac{Capital\ Cost}{Project\ Life}$
$Debt\ Interest = Capital\ Cost \times Discount\ Rate$
$Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere
$Income\ Tax = Taxable\ Income \times Tax\ Rate$
$Net\ Income = Taxable\ Income - Income\ Tax$
$Capital\ Investment = Capital\ Cost$
$Salvage\ Value$
$Manufacturing\ and\ O&M\ Cost$
$Depreciation = \frac{Capital\ Cost}{Project\ Life}$
$Debt\ Interest = Capital\ Cost \times Discount\ Rate$
$Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere
Values
0.0045
$15,102,469.62 2.4167
The operating cost involves the cost from the beginning of reconstruction to operation, which includes the pre-sale of buildings before completion. The specific operating costs are determined by the subsequent owners.
ternatives
1
2
$35.6 million
$46.15 million
$20 million
$27.5 million
$1,827,899.44 $1,827,899.44 $7,504,156.54 $7,504,156.54 $63,869.79 $3,112,869.79 $19,160.94 $933,860.937.
$44,708.85 $44,708.85 $44,708.85 $44,708.85 $1,827,899.44 $1,827,899.44 $137,092,308 $137,092,308 $79,357,260 $79,357,260 $23,258,808.68 $23,258,808.68 $1,827,897.43 $1,827,897.43 $6,854,615 $8,225,538 $579,167.46 $579,167.46 $1,280,538.20 $1,370,923.08 $128,053.82 &137,092.31
$28,585,186.58 $25,637,511.34 Interpretation of results
PB value is used to measure the profitability of a project. If PB i
NPV is an important indicator for evaluating whether a project's
BCR is used to evaluate the relationship between the benefits a
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$62.22 million
$72.47 million $20 million
$30 million
$40 million
$40 million
$13709.230.77
$13,709,231 $8,509,769.23 $11,239,230.77 $3,596,769.23 $1,886,769.23 $8,392,461.54 $4,402,461.54 $8,392,461.54 $4,402,461.54 $40 million
$40 million
$2 billion
$2 billion
$400 million
$400 million
$62.23 million
$72.48 million
$20 million
$30 million
$40,000,000.00 $40,000,000.00 $7,504,156.54 $7,504,156.54 $5,284,156.54 $5,034,156.54 Interpretation of results
PB value is used to measure the profitability of a project. If PB i
NPV is an important indicator for evaluating whether a project's
BCR is used to evaluate the relationship between the benefits a
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3
$35.7 million
$21 million
$1,827,900.44 $7,504,156.54 $837,130.21 $251,139.06 $44,708.85 $44,708.85 $1,827,899.44 $137,092,308 $79,357,260 $23,258,808.68 $1,827,897.43 $9.596,461.49
$579,167.46 $1,462,318 $146,232 $24,248,762.61 is greater than 1, the project is considered to have economic benefits because a posi
s investment is worth it. If the NPV is positive, the project is financially profitable; if th
and costs of a project. If the BCR is greater than 1, the total return of the project is gr
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$82.72 million $40 million $40 million
$13.709.230.77
$11,989,230.77 $3,596,769.23 $8,392,461.54 $8,392,461.54 $40 million
$2 billion
$400 million
$82.73 million
$40 million $40,000,000.00 $7,504,157 $4,784,156.54 is greater than 1, the project is considered to have economic benefits because a posi
s investment is worth it. If the NPV is positive, the project is financially profitable; if th
and costs of a project. If the BCR is greater than 1, the total return of the project is gr
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itive NPV indicates a positive net present value of the project. If PB is less than 1, the
he NPV is negative, the project may not have profitability. A higher NPV usually indic
reater than the total cost, which is usually considered a good investment. If the BCR
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itive NPV indicates a positive net present value of the project. If PB is less than 1, the
he NPV is negative, the project may not have profitability. A higher NPV usually indic
reater than the total cost, which is usually considered a good investment. If the BCR
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e project may not have sufficient profitability, indicating that the net present value o
cates a more attractive investment.
is less than 1, the project may not be worth investing because the total cost is grea
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e project may not have sufficient profitability, indicating that the net present value o
cates a more attractive investment.
is less than 1, the project may not be worth investing because the total cost is grea
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of the project is negative. ater than the total revenue.
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of the project is negative. ater than the total revenue.
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Related Documents
Related Questions
Use the information for the question(s) below.
Project A
- 10,000
Project B
Time 0
- 10,000
Time 1
5,000
4,000
Time 2
4,000
3,000
Time 3
3,000
10,000
If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?
OA. Project A
OB. Project B
OC. Project A and Project B have the same ranking
OD. Cannot calculate a payback period without a discount rate.
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of
stion
Given the following information about projects A and B:
Project A Project B
-10,000
-10,000
4,000
3,000
10,000
Time 0
Time 1
Time 2
Time 3
If alpha company uses IRR rule to choose projects, which of the projects (Project A or Project B)
will rank highest?
Select one:
O
O
O
5,000
4,000
3,000
a. Project A
b. Project B
c. Project A and Project B have the same ranking.
d. Cannot calculate a payback period without a discount rate.
arrow_forward
Use the table for questions 18 and 19 below. Consider the following two projects:
Year 0
Year 1
Year 2
Year 3
Year 4
Cash
Elow.
Cash
Elow
Cash
Flow
Cash
Cash
Elow
Discount
Project
Flow
Rate
A
-78
20
40
60
.105
B
-86
37
24
24
46
105
Question 18
The NPV of project A is closest to:
a) 16.0
b) 34.6
c) 39.3
d) 41.6
Answer.
Question 19
The NPV of project B is closest to:
a) 33.3
b) 43.3
c) 44.6
d) 54.3
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Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $148,000.
Project 2 requires an initial investment of $133,000.
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Project 1
$ 120,000
Project 2
$ 100,000
70,000
25, 000
13,000
$ 12,000
37,000
23,000
25, 000
$ 15,000
Income
(a) Compute each project's annual net cash flow.
(b) Compute payback period for each investment.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute each project's annual net cash flow,
Annual Amounts
Project 1
Project 2
Income
Cash Flow
Income
Cash Flow
Sales of new product
120,000
100,000
Expenses
Malerials, labor, and overhead (except depreciation)
70.000
37,000
Depreciation-Machinery
25.000
23.000
Seling, general, and administrative expenses
13,000
25,000
Income
Net cash flow…
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what should i put for the blank my cursor is on and can i get feedback on the red x’s
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Part B please
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Critical path activities in this project?
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Please do not give solution in image format thanku
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How return on investment is calculated in this table?
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Can I please have assistance with the answers that are incorrect in red? Thank you
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Answer B pls!!
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A) Identify and classify the project into Replacement decision,Expansion decision, Diversification decision, Safety and/or environmental projects, Independent Projects, Mutually-exclusive project and Dependent Projects/Contingent Projects:
B) Also mention the reasons for the classification.
1. Oman Insurance Company started their new branch in Salalah.
2. Badar Al Sama Hospital entered into a contract with health providers in UAE to open their clinics in UAE.
3. Intertek had two projects, that require initial outlay of RO250,000. Board of Directors decided to accept both projects, as the company had sufficient funds to invest in both projects.
4. Marine Engineering has a budget of $50,000 for expansion projects. If available Projects A and B each cost $40,000 and Project C costs only $40,000.
5. Slice Traders, specialized in selling carbonated juices intends to start their manufacturing units, producing potato chips in Oman.
6. A leading bank in the region intends to add mutual…
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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
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Please do not give solution in image format thanku
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Please do not give solution in image format thanku
Net Present Value (NPV) analysis is a financial evaluation method used in project management to assess the profitability and viability of investment projects. NPV analysis takes into account the time value of money by discounting future cash flows back to their present value, allowing project managers and stakeholders to make informed decisions regarding the financial feasibility of a project
a) A project requires an initial investment of RM100,000 and is expected to generate cash flows of RM30,000 per year for the next five years. The discount rate is 10%. Calculate the Net Present Value (NPV) of the project.
b) Describe factors and variables that are taken into consideration when calculating the Net Present Value of a project.
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please answer in text with introduction , concept ,explanation , computation , steps for each part and steps clearly and completely no AI no copy paste
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Exercise 24-10 (Algo) Net present value, unequal cash flows, and profitability Index LO P3
Following is information on two alternative investment projects being conside
return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
y Tiger Company. The company requires a 4%
Initial investment
Project X1
$ (130,000)
Project X2
$ (220,000)
Net cash flows in:
Year 1
Year 2
Year 3
50,000
97,500
60,500
87,500
85,500
77,500
a. Compute each project's net present value.
b. Compute each project's profitability index.
c. If the company can choose only one project, which should it choose on the basis of profitability index?
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
Compute each project's net present value.
Note: Round your final answers to the nearest dollar.
Net Cash
Flowe
Present
Value of 1
at 4%
Present Value
of Net Cash…
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Related Questions
- Use the information for the question(s) below. Project A - 10,000 Project B Time 0 - 10,000 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? OA. Project A OB. Project B OC. Project A and Project B have the same ranking OD. Cannot calculate a payback period without a discount rate.arrow_forwardof stion Given the following information about projects A and B: Project A Project B -10,000 -10,000 4,000 3,000 10,000 Time 0 Time 1 Time 2 Time 3 If alpha company uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? Select one: O O O 5,000 4,000 3,000 a. Project A b. Project B c. Project A and Project B have the same ranking. d. Cannot calculate a payback period without a discount rate.arrow_forwardUse the table for questions 18 and 19 below. Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Year 4 Cash Elow. Cash Elow Cash Flow Cash Cash Elow Discount Project Flow Rate A -78 20 40 60 .105 B -86 37 24 24 46 105 Question 18 The NPV of project A is closest to: a) 16.0 b) 34.6 c) 39.3 d) 41.6 Answer. Question 19 The NPV of project B is closest to: a) 33.3 b) 43.3 c) 44.6 d) 54.3arrow_forward
- Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $148,000. Project 2 requires an initial investment of $133,000. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Project 1 $ 120,000 Project 2 $ 100,000 70,000 25, 000 13,000 $ 12,000 37,000 23,000 25, 000 $ 15,000 Income (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's annual net cash flow, Annual Amounts Project 1 Project 2 Income Cash Flow Income Cash Flow Sales of new product 120,000 100,000 Expenses Malerials, labor, and overhead (except depreciation) 70.000 37,000 Depreciation-Machinery 25.000 23.000 Seling, general, and administrative expenses 13,000 25,000 Income Net cash flow…arrow_forwardwhat should i put for the blank my cursor is on and can i get feedback on the red x’sarrow_forwardPart B pleasearrow_forward
- Can I please have assistance with the answers that are incorrect in red? Thank youarrow_forwardAnswer B pls!!arrow_forwardA) Identify and classify the project into Replacement decision,Expansion decision, Diversification decision, Safety and/or environmental projects, Independent Projects, Mutually-exclusive project and Dependent Projects/Contingent Projects: B) Also mention the reasons for the classification. 1. Oman Insurance Company started their new branch in Salalah. 2. Badar Al Sama Hospital entered into a contract with health providers in UAE to open their clinics in UAE. 3. Intertek had two projects, that require initial outlay of RO250,000. Board of Directors decided to accept both projects, as the company had sufficient funds to invest in both projects. 4. Marine Engineering has a budget of $50,000 for expansion projects. If available Projects A and B each cost $40,000 and Project C costs only $40,000. 5. Slice Traders, specialized in selling carbonated juices intends to start their manufacturing units, producing potato chips in Oman. 6. A leading bank in the region intends to add mutual…arrow_forward
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