Cost planning assignment 6

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Question: There are Two paybacks 1) Payback period X =  6 years and 2) Payback period Y =5 years Please tell Me why machine X is financially viable?

A) Consider the following two mutually exclusive projects: Cash flow (A) -RM300,000 20,000 50,000 50,000 390,000 i) ii) Year 0 1 2 3 4 Cash flow (B) -RM40,000 19,000 12,000 18,000 10,500 If you apply the payback criterion, which investment will you choose if you set the maximum payback period of 3 years? If you apply the internal rate of return (IRR) criterion, which investment will you choose, if you require a 15% return?

4. If the terminal balance of a 5-year project at 10% s0 then which one below is true? A. The IRR of the project is less than 10% B. The future worth of the project is greater than 0 C. Discounted payback perlod is 5 years OD. The present worth of the project is less than 0 5 In an incremental IRR analysis, which analysis period should be used to compare 2 mutually altemative projects with 3 and 4 years of useful lives? (Assume an indefinite analynis perlod and that the projects are repeatable) O A. B years O B. 12 years OC. 4 years D. 3 years

1.1 How does the risk and return trade-off can be applied in real life?

1. A project that provides annual cash flows of $1,200 for nine years costs $6,000 today. Is this a good project if the required return is 8 percent? What if it's 24 percent? At what discount rate would you be indifferent between accepting the project and rejecting it? The graph displays the project's NPV profile NPV 1 0 -1 0.1 0.2 NPV Profile 0.3 0.4 Interest Rate

Pm.3   Find out the profitability index (PI) of the following project assuming the required rate of return is 8%. Will you accept the project? Why? year 0 1 2 3 4 5 Cash Flow ($) -250,000 50,000 40,000 120,000 80,000 45,000 Group of answer choices Accept the project because the PI is equal to 1.06, which is larger than 0. Accept the project because the PI is equal to 0.98, which is larger than 0. Reject the project because the PI is equal to 1.06, which is larger than 1. Reject the project because the PI is equal to 0.98, which is lower than 1. Accept the project because the PI is equal to 1.06, which is larger than 1.

Consider a project with the following cash flows: Year Cash Flow - 10000 1 5000 5000 3 5000 4 5000 If the appropriate discount rate for this project is 15%, then the net present value (NPV) is closest to: O A. $2,565 O B. $4,275 O C. $2,992 O D. $30,000

4 A project has the following cash flows: Year Cash Flows 0 -$ 11,400 12 4,930 7,090 3 4 4,560 -1,700 Assuming the appropriate interest rate is 8 percent, what is the MIRR for this project using the discounting approach?

which one is the answer？ Why choose it？

Consider a project with the following cash flows: Year Cash Flow - 10000 1 4000 4000 3 4000 4 4000 Assume the appropriate discount rate for this project is 15%. The payback period for this project is closest to: O A. 3.75 О В. 2.5 О С. 3 O D. 2

0 Question 3 A) A project requires the following cash outlays: $10,000 now and $5,000 a year from now. The project will give a cash return of $5,000 annually for 6 years, the first payment coming in after 3 years. The risk-free rate is 6%. If the proper discount rate is 12%, would you accept this project? B) Evaluate a project with a construction period of 3 years, an operating period of 15 years, and an initial investment of $30,000,000. The project generates annual cash flows of $7,000,000 during the operating phase. Calculate the NPV and IRR for the entire project, including both phases, using a discount rate of 10%. C) Describe the different risk and mitigation techniques that may be used in a power plant project, in controlling (a) engineering risk; (b) completion risk; and (c) market risk. 6:24 PM ✓

Suppose you are offered a project with the following payments: Year Cash Flows 0 $ 9,800 1 −5,300 2 −4,000 3 −3,100 4 −1,700 a. What is the IRR of this offer? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the appropriate discount rate is 15 percent, should you accept this offer? c. If the appropriate discount rate is 21 percent, should you accept this offer? d-1. What is the NPV of the offer if the appropriate discount rate is 15 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d-2. What is the NPV of the offer if the appropriate discount rate is 21 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

You are considering a project with an initial cost of $8245 and a required return of 11.6%. What is the discounted payback if the expected cash flows are $3148, $3429, $2731, $3048, and $3930 respectively over the next 5 years? a. 3.66 years b. 3.66 years c. 3.36 years ✔ d. 2.96 years e. 2.98 years

5. Calculating IRR A firm evaluates all of its projects by applying the IRR rule. If the required return is 11 percent, should the firm accept the following project? LO 3 Year Cash Flow -$157,300 1 74,000 87,000 46,000

You are considering the following two mutually exclusive projects. The required rate of return is 11.25% for project A and 10.75% for project B. Which project should you accept?   YEAR PROJECT A PROJECT B 0 -$48,000 -$126,900 1 $18,400 $69.700 2 $31,300 $80,900 3 $11,700 $0

You are considering an investment opportunity that requires an initial investment of​ $150 million in period 0. The project will generate only one future payment of​ $168 million at the end of the first year. The cost of capital is​ 8% . What is the IRR for the​ project? ​ [Note that getting the actual value should not require trial and error or a financial​ calculator, because this is a simple​ case.]     A. ​114%   B. ​8%   C. ​20%   D. ​12%   E. ​10.7%   F. ​5.6%   G. ​14%   H. ​112%

Question 4 You are considering a project with an initial cash outlay of $6000 and expected free cash flows of $2000,2000,2000,2000,2000 and $3000 at the end of each year for 6 years. What is modified internal rate of return (MIRR) on this project if the cost of capital and reinvestment rate is the same as 12 percent? O 19.2222 % O 4.80556 % O 24.0278 % O 28.8334 % O 14.4167 %

Ll 2 just need last one fixed

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$350,000 −$35,000 1 25,000 17,000 2 70,000 11,000 3 70,000 17,000 4 430,000 11,000 Assume you require a 15 percent return on your investment and a payback of 4 years. a. If you apply the discounted payback criterion, which investment will you choose? Why? b. If you apply the NPV criterion, which investment will you choose? Why? c. Based on your answers in (a) and (b), what you can say anything about the IRR of both projects? which project will you finally choose? Why?

4. Calculating Discounted Payback (LO3) An investment project has annual cash inflows of $4,200, $5.300, $6.100, and $7,400, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $7.000? What if the initial cost is $10,000? What if it is $13,000?

Q5: Solve the following two independent scenarios: A. How much must be invested now to receive $30,000 for 10 years if the first $30,000 is received one year from now and the rate is 8%? Future Value PV FV Tables Factor Present Value       PLEASE NOTE: All FV Factors will be rounded to three decimal places (i.e. 1.234). All dollar amounts will be with "$" and commas as needed and rounded to whole dollars (i.e. $12,345). Use the appropriate EXCEL spreadsheet in the Chapter11 TVOM Examples.xlsx  downloadto prove your answer above: Using the appropriate EXCEL spreadsheet, the answer =  PLEASE NOTE: The dollar amount will be with "$" and commas as needed and rounded to two decimal places (i.e. $12,345.67).    B. Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate? Future Value PV FV Tables Factor Net Present Value       PLEASE NOTE: All FV Factors will be rounded to three…