Exercise1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Millionpesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Averageannual inflation rate: 5 %, T-bill rate: 4.0%.Answer these questions:a) Would you pursue the said business?b) Why?Note: Please show all calculations.2. Planned Business 2: Upon initial collection of reliable data, another planned business, a chain of ten (10) motorcycle repair shops in NCR is predicted to lastfor 20 years and would be worth 240 Million pesos to build and with estimated an average annual predicted gross revenues of about 50.3 million pesos andyearly total operational cost of 19.70 million pesos. Average annual inflation rate: 4.2 %, T-bill rate: 3.0%.Answer these questions:a) Would you pursue the said business?b) Why?Note: Please show all calculations.3. Assuming, you only have enough resources for one business, which of the said businesses would you establish? Why?Please see next item on page 2.SHORT RUN PRODUCTIONShort run ProductionIn the short run, firms can for a time increase its output by adding units of labor/workers to its fixed plant. But by how much will output rise when it adds the labor and at what input level(VI) is profit at a maximum or loss at minimum and what would be the optimal output level? Let's find out by completing the table of data collected below.Php10,000.00Php 600.00VariableTP (Q) (InthousandsTR (Totalrevenue) =Qx PriceProfit (TR-TC) at Price=FixedPrice =Input (L) (inthousands)Input (K)MPAPTFCTVCTCMCAFCAVCATC Php 40.00PhP 40.001.5921.282.2945.23.1993.133.69101.1113.99106.814.39107.714.79103.47TR =Q x PriceProfit = TR - TCInstructions/Question:a. What output level should be produced at a price of Php 40.00 per unit ?b. What should be the number of laborers used'employed if the price is Php 40.00 to maximize profit/minimize loss?

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1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?

1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?

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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QUESTION 2 Your firm is trying to invest in a Project A for planning horizon of 5 years. The initial investment and initial revenue are RM300, 000 and RM10, 000 respectively. The cost for first year including renovation of building (RM5, 000), IT (RM5, 500) and maintenance (RM9, 000). The annual cost of operation is RM20, 000 for second year while remaining are RM10, 000. The company predicts that the project will generate a stream of earning RM100, 000, RM120, 000, RM130, 000 and RM150, 000 for first 4 years respectively. While the expected revenue of year 5 comes from 3rd party payment (RM70, 000), technology transfer (RM70, 000) and new systems (RM60,000). Develop a gross cash flow and calculate the cash flow after tax of 30%. Estimate the internal rate of return (IRR) after If the Project B has IRR of 35%, decide the best investment and state your
Suppose that immediately after making the fifth payment to Joseph as described above, Wagon Financial also implements a new investment strategy which they believe will yield even higher investment returns than the original 12% per annum. Assuming this to be true, would Wagon Financial need to set aside more or less money than your answer in part f) to be sure that they can afford to make all future payments to Joseph? Justify your answer.
a) Cash Flow Diagram b) manual solution Company C just went into a manufacturing contract. The contract will pay Company C $3 million starting 5 years from and amounts increasing by $100,000 each year through year 10. What is the present worth of the contract if the interest rate is 10% per year?
4. Your firm is evaluating a project that should generate revenue of P4,600 in year 1, P5,200 in year two, P5,900 in year three, and P5,700 in year four. The firm receives each cash flow at the end of each year. If your firm's required return is 12%, what is the future value of these cash flows at the end of year four? a.P16,074.51b.P22,583.53c.P25,293.55d.P28,328.77
Calculate the equivalent future amount in year 4 that a company is paying for the dozer at 4% per year if the price of the price of the bulldozer now $100,000 (Draw the cash flow diagram) e
Example: Evaluating a business investment opportunity • A low-risk, 4-year investment opportunity promises to pay $3,000, $6,000, and $5,000 at the end of the first, second and fourth year, respectively. A cash injection of $1,000 is required at the end of the third year. The investment may be purchased for $10,000, which would have to be borrowed at an effective interest rate of 10%. Use Economic Value Added principle to determine whether the investment should be undertaken.
Oriole Company is considering an investment that will return a lump sum of $820,000, 6 years from now. Click here to view the factor table 1. Table 2 Table 3 Table 4 What amount should Oriole Company pay for this investment to earn an 7% return? (For calculation purposes, use 5 decim displayed in the factor table provided, e.g. 5.24571. Round answer to 2 decimal places, e.g. 25.25.) Oriole Company should pay 4 $
Problem 3: A banking service project has an investment of $875,000. It has profits of $335,000 in years 1,3,5,7, and 9, and $157,000 in years 2,4,6,8,and 10. Assume the required rate of return is 20% and the inflation rate is 2.5%. Using the Net Present Value method, determine if the banking company should invest in this project.
Solve part c
Please answer fast i give you upvote.
1. FastDrop economic value You are planning to place your money in safe government securities, which currently offer a 4% riskless rate of return. Before making this investment, an entrepreneur approaches you and asks you to purchase her new business venture, Fast Drop, a delivery service for legal documents that would produce a single cash inflow of $80,000 at the end of the year. You have determined that 6% is an appropriate risk premium for this investment. How much would you be willing to pay for Fast Drop?
I. Provide an answer with solution

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