Excel Risk Assignment 2 Spreadsheet (3)

9.36 The fouT mutuzlly exclusive alternatives below are being compared using the B/C method. What altemative, if any, should be selected? Initial Investment, Incremental B/C When Compared With Altemative Altemative S Millions BC Ratio K L 20 0.40 --- 25 33 0.96 122 K 1.42 2.14 --- 0.72 0.80 0.08-- 45 0.39 I. Activate Winde PC settings to DFocus SAN FRACISCO.CA

The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E

Expected return and standard deviation a. What is the expected return of asset​ J?

he. 2

Four alternatives (Alternatives A, B, C, and D) described below are being evaluated. Incremental Rate of Return, %, When Compared with Alternative B Alternative A B C D Initial Investment, $ - 30,000 - 71,000 - 95,000 - 110,000 Overall Rate of Return. % 16.9 15 17.5 10 A 18.7 19.2 16.7 15 C 10 1) A) If the alternatives are independent, which one(s) should be selected at a MARR of 15% per year? There is no budget limit. B) If the alternatives are mutually exclusive (ME), which one should be selected at a MARR of 17% per year? {Hint: Consider Do Nothing (DN)} 2) B/C Analysis - Single Project: Calculate the conventional B/C ratio for a county government project that is predicted to have the following cash flows: • Costs of $1,900,000 per year • Benefits of $2,100, 000 per year Disbenefits of $250,000 per year. Should the county government invest in that project? Please explain your answer. (meaning: explain why you think the government should or should not invest in the project). 3)…

Based on the information below  which projects will we choose based on weighted average profitabiltity Index if we only have OMR500,000 to invest? Project NPV Investment PI A 130,000 200,000   B 241,250 225,000   C 294,250 275,000   D 262,000 250,000                     Select one: a. WAPI AD b. WAPI AB c. WAPI BD d. WAPI BC

Subject: accounting

Accounting question

Question 2 You must choose between two investments, X and Y . The profitability index (PI), net present value (NPV) and internal rate of return (IRR) of the two investments are as follows: Criteria Investment X Investment Y NPV R44 000 −R22 000 PI 1,945 0,071 IRR 16,00% 8,04% Which investment(s) should you choose, taking all the above criteria into consideration, if the cost of capital is equal to 12% per year? [1] X [2] Y [3] Both X and Y [4] Neither X nor Y [5] Too little information to make a decision 17 DSC1630

Consider the following two projects: Project Year 0 Year 1 Year 2 Cash Flow Cash Flow Cash Flow A B - 100 -73 40 30 30 The profitability index for project B is closest to: OA. 25.99 B. 0.1 O C. 17.33 O D. 0.17 50 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate 0.15 0.15

KLA Cost Ziege Systems is considering the following independent projects for the coming year Project Required Investorent Rate of Return Risk A $4 million 12.25% Hish High $5 million Low B C DEFGH $3 million $2 million $6 million $5 million $6 million $3 million 500 14.75 10.25 9.75 13.25 13.25 7.75 12.25 million Average High Average Low Low } If Ziege con only invest a total of $13 million what would be the dollar size of its capital budget? $ million What would be the dollar size of its capital budget? $

Suppose the following two independent investment opportunities are available to a company. The appropriate discount rate is 8 percent. Year O 1 2 3 Project Alpha -$4,500 b. 2,300 2,200 1,450 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project Alpha Project Beta Project Beta -$ 6,100 1,350 4,500 4,000 Profitability Index Which project(s), if either, should the company accept based on the profitability index rule? Project Alpha O Project Beta Neither project O Both projects