1. Consider the costs and benefits of the following public projects shown in the table.Costs ($)Year 1Project A6000Project BProject C800010000Year 2700060006000Year 340004000N.A.Project B3000Benefits ($)Project AProject CYear 1N.A.N.A.Year 21000090006000Year 380001100010000(a) For a discount rate of 5%, comment on the assessment of the above projects usingbenefit-cost ratio of cost-benefit analysis (CBA).(b) If there is only $17500 for conducting the projects, what would you recommend?

Benefit-cost Ratio is the relationship between benefits and costs. It is recommended to go with one…

1. Consider the costs and benefits of the following public projects shown in the table. Costs ($) Year 1 Project C Project A Project B 8000 6000 6000 10000 Year 2 7000 6000 Year 3 4000 4000 N.A. Project A N.A. Project B Project C N.A. Benefits ($) Year 1 3000 Year 2 10000 9000 6000 Year 3 8000 11000 10000 (a) For a discount rate of 5%, comment on the assessment of the above projects using benefit-cost ratio of cost-benefit analysis (CBA). (b) If there is only $17500 for conducting the projects, what would you recommend?

1. Consider the costs and benefits of the following public projects shown in the table. Costs ($) Year 1 Project C Project A Project B 8000 6000 6000 10000 Year 2 7000 6000 Year 3 4000 4000 N.A. Project A N.A. Project B Project C N.A. Benefits ($) Year 1 3000 Year 2 10000 9000 6000 Year 3 8000 11000 10000 (a) For a discount rate of 5%, comment on the assessment of the above projects using benefit-cost ratio of cost-benefit analysis (CBA). (b) If there is only $17500 for conducting the projects, what would you recommend?

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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Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.2% for all the recommended projects. Rank order the projects based on the profitability index. Project A Project B Project C (35,000) (65,000) (86,000) Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 44,000 35,000
11) The Department of Public Works has $1.1 million to allocate amongst several public projects. Data on these projects are presented in the following table: Annual benefit, Project First cost, $K $K/year Life, years 400 100 10 B 300 100 25 250 80 15 500 70 40 350 90 10 200 60 20 Using a MARR of 15%, rank the projects by their BCR, and comment on the most efficient way to allocate $1.1 million.
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.20% for all the recommended projects. Rank order the projects based on the net present value. Project A Project B Project C (35,000) (65,000) (86,000) Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 44,000 35,000
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.20% for all the recommended projects. Rank order the projects based on the internal rate of return. Project A Project B Project C (35,000) (65,000) (86,000) 44,000 Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 35,000
It is known that a project for the construction of public facilities with estimated costs and benefits of the project is as follows: • 6 year project life. • The applicable discount rate is 10% in the first year and the discount for the first year the second is an increase of 5%. • Expenses incurred only in year 1 and 2, with each Rp. 515,000,000 and Rp. 415 000 000. • Benefits received from year 3 to year 6 respectively Rp. 205,000,000, Rp. 305 000 000, Rp. 405 000 000 and IDR 505,000,000 Please count and explain the Project investment criteria a. Payback Period of Investment criteria b. NPV (net present value) criteria c. IRR (Internal Rate of Return) criteria
What is the profitability index of a project that costs $10,000 and provides cash flows of $3,600 in years 1 and 2 and $5,600 in years 3 and 4? The discount rate is 9% Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Answer is complete but not entirely correct. Profitability index 1.4624
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $1,900,000. Given the discount rate and the future cash flow of each project, what are the IRRs and MIRRs of the three projects for Quark Industries? Cash Flow Project M Project N Project O Year 1 $500,000 $600,000 $1,000,000 Year 2 $500,000 $600,000 $800,000 Year 3 $500,000 $600,000 $600,000 Year 4 $500,000 $600,000 $400,000 Year 5 $500,000 $600,000 $200,000 Discount rate 9% 13% 16% What is the IRR for project M?
None
The two projects are as follows. The discount rate is 10%. Project X Project Y Year Cash Flow Cash Flow 10 -$100,000 $100,000 1 $50,000 $10,000 2 $40,000 $30,000 3 $30,000 $40,000 4 $10,000 $60,000 Imagine that the discount is 5%, and the two projects are mutually exclusive. Which project shall you choose? O Project X O Project Y O Both O None
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