1. A company is planning to start an investment, for which there are 6 alternatives. The company can chooseonly one of these, in other words: the projects are mutually exclusive.Data given:• All projects have the same useful life, of 6 years.•The (annual nominal, compounded annually) MARR is 10% if the investment is $1,250 or less, 11%if more than $1,250.Table containing the Initial Investment, the Annual net cash flows (constant) and the IRR:123456Initial Investment-$1,000-$750-$1,500-$500-$2,000-$2,500Annual net cash flowIRR$2259%$200$350$120$500$65015%11%12%13%14%What is the best project?a) Apply the incremental investment analysis procedure to the NPV-method

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Answered: 1. A company is planning to start an…

Principles of Accounting Volume 2

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Chapter11: Capital Budgeting Decisions

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Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months and days). 5.2 Net Present Value of Project Tan.5.3 Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). INFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you: PROJECT COS PROJECT TANNet Profit Net ProfitYear R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculatedusing the straight-line method.
Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Suggest the best technology which is to be implemented based on the future worth method of comparison assuming 20% interest rate, compounded annually. Annual Revenue (Php) Initial Life Investment (years) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 10 Technology Z 1,800,000 500,000 a. Technology X since it has the highest revenue. O b. Technology X since it is the least costly. c. Technology Z since it has the highest revenue. O d. Technology Y since it has the highest revenue. 10
You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal? b. What is the ERR ( E=MARR) of this proposal? c. What is the Simple and Discounted payback? (Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)
Company A has provided figures for two investment projects, only one of which may be chosen. These are the calculations based on the figures: Payback Period The Accounting Rate of Return / Return on Capital Employed Net Present Value Project A 2 years 4 months 27.08% £63,705 Project B 2 years 7 months 39.47% £74.971 Analyse and provide recommendations as to what project needs to be chosen based on the calculations above.
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DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements associated with the project are shown below. MARR is 6%/year. Solve, a.What is the future worth of this investment?b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Should DuraTech implement the proposed process improvement?
2.) Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold a. Evaluate all alternatives using PW method and determine which alternative is preferable. b. Use incremental analysis to determine the best alternative. Capital Investment Annual Expense Annual Revenue A $28,000 $15,000 $23,000 $6,000 B $55,000 $13,000 $28,000 $8,000 C $85,000 $22,000 $42,000 Salvage Value $10,000 Useful life 10 10 10
Project A requires a $315,000 initial investment for new machinery with a five-year life and a salvage value of $35,500. Project A is expected to yield annual income of $23,900 per year and net cash flow of $78,750 per year for the next five years.Compute Project A’s accounting rate of return. *please help correct the answer
Required: i.Determine the initial capital of Project A and Project B. If Project A and Project B are mutually exclusive, calculate the Net Present Value (NPV) of Project A and Project B given that the cost of capital is 5%.Based on the NPV method, explain with reason which project should be invested. ii. Axis Sdn. Bhd.’s current investment policy is to accept only investments that are recoverable within 3 years.Calculate the discounted payback period of Project A and Project B if the cost of capital is5%. Based on the calculated discounted payback period of Project A and Project B, advise the company on which new project to select if they are mutually exclusive.
Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the profitability index for project A. (Round to 3 decimals) Year 0 1 2 3 4 5 Project A -15,000,000 2,000,000 3,000,000 5,000,000 5,000,000 6,000,000 Project B -15,000,000 6,000,000 6,000,000 6,000,000 1,000,000 1,000,000
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Consider the three small mutually exclusive investment alternatives in the table below. The feasible alternative chosen must provide service for a 10-year period. The MARR is 12% per year, and the market value of each is 0 at the end of useful life. State all assumptions (repeatablity/co-terminated at 5 year study period) you make in your analysis. Which alternative should be chosen? A B Capital Investment PhP 2,000 PhP 8,000 PhP 20,000 Use IRR (FW equation) analysis. Annual revenues less expenses 600 2,200 3,600 Useful life (years) 5 5 10 ANSWER: IRRA = 15.24% ; IRRB = 11.65% ; IRRC = Blank 3% ; Choose alternative Blank 4 %3D %3D Do not use comma and any unit of measure. Use two decimal places in the Final answer.

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