Basic scenario analysis Prime Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely,and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the following table.Initial investment (CF)OutcomePessimisticMost likelyOptimisticProject A$12,800Annual cash inflows (CF)$8601,6102.480Project B$12,800a. The range of annual cash inflows for project A is $$1,5201,6101,740a. Determine the range of annual cash inflows for each of the two projects.b. Assume that the firm's cost of capital is 10.3% and that both projects have 18-year lives. Construct a table showing the NPVs for each project for each of the possible outcomes. Include the range ofNPVS for each project.(Round to the nearest dollar.)

In order to calculate range of project we calculate the total cash flow of the project which is most…

. Determine the range of annual cash inflows for each of the two projects. . Assume that the firm's cost of capital is 10.3% and that both projects have 18-year lives. Construct a table showing the NPVs for each project for each of the possible outcomes. Include the range of HPVS for each project.

. Determine the range of annual cash inflows for each of the two projects. . Assume that the firm's cost of capital is 10.3% and that both projects have 18-year lives. Construct a table showing the NPVs for each project for each of the possible outcomes. Include the range of HPVS for each project.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A project has initial costs of $3,000 and subsequent cash inflows of $1350,275,875 and 1525 . The company's 10% cost of capital is an appropriate discount rate for this average risk project. Calculate the following: NPV IRR Profitability Index Please number/label each of your answers as shown above. Be sure to show your TVM function calculator inputs, and four decimal places.
Perform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $ 75,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $110,000 each year in Years 2, 3, and 4. Use a 6 percent discount rate, and round the discount factors to two decimal places. What is the Return on Investment (ROI)? (Keep your answer in two decimal places. e.g. 46.59. Do not enter % symbol.)
Keane & Co plc is considering two possible investments. The company requires an Accounting Rate of Return of 12% and payback within 2 years. It has a cost of capital of 12%. Forecast sales and production units Year 1 Year 2 Year 3 Year 4 Contribution per unit Fixed cost per year Initial investment Residual (scrap) value Accounting Rate of Return Internal Rate Return Discount factors at 12% are: Year 1 Year 2 Year 3 Year 4 Year 5 0.893 0.797 0.712 0.636 0.567 Project J 60,000 110,000 80,000 50,000 £40 £800,000 £7,600,000 £300,000 9.5% 8% Project K 30,000 24,000 20,000 12,000 £120 £700,000 £5,500,000 £150,000 19% 18%
I need help finding the Profitability index for each project (D) using Excel
Which of the following comes closest to the net present value (NPV) of a project whose initial investment is $5 and which produces two cash flows: the first at the end of year 2 of $3 and the second at the end of year 4 of $7? The required rate of return is 13%? Select one: a. $1.84 b. $0 c. $1.64 d. $2.05 e. $2.26
Assume a project has cash flows of -$54,300, $18,200, $37,300, and $14,300 for Years 0 to 3, respectively. What is the profitability index given a required return of 12.6 percent? 1.02 .95 .98 1.06 ☐ 1.00
A project requires an initial investment of $60 million and will then generate the same cash flow every year for 9 years. The project has an internal rate of return of 17% and a cost of capital of 10%. A. Compute the project's NPV (in $ million)? Round one deciamal place.
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year 0 Cash Flow -$ 27,800 1 11,800 -23 3 14,800 10,800 If the required return is 18 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR %
Financial Manager of Timmy Company is considering two projects (project A and project H), which have cash flows as follows: Year Cash Flow of Project A (in $) Cash Flow of Project H (in $) 0 -100 -100 1 10 70 2 60 50 3 80 20 Timmy Company’s cost of capital is 10 percent. Calculate payback, NPV, IRR, and MIRR for both projects. (Please have a step by step format to your answer with explainations. Thanks (=)
The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000 a. What is the payback period of project 1?
A project requires an initial investment of 11.000 dollars. The lifetime of the project will be 14 years with a cashflow stream of 2,000 per year and an interest rate of 10.98. Compute the Savings/Investment ratio. . Add your answer

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