1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? 3. After further negotiating, the company can now invest with an initial cost of $8,100,000. Recalculate the NPV and IRR. Which plan, if any, should the company pursue?
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- Fenton, Inc., has established a new strategic plan that calls for new capital investment. The company has a 9.8% required rate of return and an 8.3% cost of capital. Fenton currently has a return of 10% on its other investments. The proposed new investments have equal annual cash inflows expected. Management used a screening procedure of calculating a payback period for potential investments and annual cash flows, and the IRR for the 7 possible investments are displayed in image. Each investment has a 6-year expected useful life and no salvage value. A. Identify which project(s) is/are unacceptable and briefly state the conceptual justification as to why each of your choices is unacceptable. B. Assume Fenton has $330,000 available to spend. Which remaining projects should Fenton invest in and in what order? C. If Fenton was not limited to a spending amount, should they invest in all of the projects given the company is evaluated using return on investment?Questions: Crowell Company is considering two capital investments. Both investments have an initial cost of $9,000,000 and total net cash inflows of $17,000,000 over 10 years. Crowell requires a 15% rate of return on this type of investment. Expected net cash inflows are as follows: Requirements - X 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? 3. After further negotiating, the company can now invest with an initial cost of $8,100,000. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? Print Done Data Table Year Plan Alpha Plan Beta 1 1,700,000 $ 1,700,000 2 1,700,000 2,400,000 1,700,000 3,100,000 4 1,700,000 2,400,000 1,700,000 1,700,000 6 1,700,000 1,600,000 1,700,000 1,300,000 8 1,700,000 1,000,000 9 1,700,000 700,000…Zachary Modems, Incorporated (ZMI) has several capital investment opportunities. The term, expected annual cash inflows, and the cost of each opportunity are outlined in the following table. ZMI has established a desired rate of return of 12 percent for these investment opportunities. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Opportunity A B C D Investment term 4 years Expected cash inflow Cost of investment $ 3,800 $ 10,100 5 years $ 6,600 $ 19,800 3 years 5 years $ 3,300 $ 5,600 $ 8,000 $ 20,200 Required es a. Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. b. Determine the net present value and the internal rate of return for each investment opportunity. Record the results in the following table. The results for investment Opportunity A have been recorded in the following table as an example.…
- Zachary Modems, Incorporated (ZMI) has several capital investment opportunities. The term, expected annual cash inflows, and the cost of each opportunity are outlined in the following table. ZMI has established a desired rate of return of 12 percent for these investment opportunities. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Opportunity A B C D Investment term 4 years 5 years 3 years 5 years Expected cash inflow Cost of investment $ 3,800 $ 10,100 $ 6,600 $ 19,800 $ 3,300 $ 5,600 $ 8,000 $ 20,200 Required es a. Compute the net present value of each investment opportunity and record your answers in the following table. The results for Investment Opportunity A have been recorded in the table as an example. b. Determine the net present value and the internal rate of return for each investment opportunity. Record the results in the following table. The results for investment Opportunity A have been recorded in the following table as an example.…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) Outcome Pessimistic Most likely Optimistic Project A $12,100 Project B $12,100 Annual cash inflows (CF) $860 1,700 2,400 $1,500 1,700 1,790 a. Determine the range of annual cash inflows for each of the two projects b. Assume that the firm's cost of capital is 9.1% and that both projects have 19-year lives. Construct a table showing the NPVs for each project for each of the possible outcomes. Include the range of NPVs for each project COTTOQuestion 1 : Assume you are the finance manager of Almanor Company , and the company is considering investing in one of the three projects . The life for both the Projects X , M and Project Y is 5 years . Project X costs OMR . 20500 , Project M costs OMR . 20500 and Project Y costs OMR.20500 . The discount rate / cost of capital is 4.15 % . Required : Use the following techniques to help company to decide which Machine is better and justify why ? A) Payback period B) Discount payback period C) Net Present Value D) Present value index -Profitability index. Year Project X Project M Project Y 1 7865 3748 8752 2 4567 7609 8393 3 9676 4628 4508 4 7292 8905 7836 5 9900 9904 8287
- Assuming you are facing making a decision on a large capital investment proposal. the capital investment amount is $640,000, Estimated the study period is 8 years. The annual revenue at the end of each year is $180,000, and the estimated annual year-end expense is $42000starting in year one, Assuming a market value at the end year is $ 20,000, and the benchmark rate is 10%, Find the cash flow chart, the NPV, the dynamic payback period, and the IRR of this project.Consider a project with initial investment of Birr 25,000 generating the following cash flows over 4 years. Year Project cash flow (Birr) 0 (25,000) 1 5,000 2 7,000 3 13,000 4 16,000 ii.1 Based on the above details compute the following: Internal Rate of Investment (IRR) Profitability Index (PI) ii.2 Do you accept this project for investment? Give reason for your answer.A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow $28,900 12,900 15,900 11,900 2. What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
- Can you show me how this is done? Kepner Inc, is considering a capital investment project. that will provide annual cash flows of $31,248, requires an initial investment of $62,241, and the PV of cash flows is $106,796. What is the profitability index of the project? Round your answer 2 decimal places Selected Answer: 76 Correct Answer: 1.72 ± 0.01Put answer in table format Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $560,000 and has a present value of cash flows of $2,200,000.0. Project 2 requires an initial investment of $5,000,000 and has a present value of cash flows of $7,000,000. 1. Compute the profitability index for each project.2. Based on the profitability index, which project should the company prefer?Question: You are a financial analyst for the Hitler Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each project is 12 percent. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year Project X Project Y 0 ($10,000) ($10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 Required: Calculate each project’s payback period, discounted payback period, net present value (NPV), profitability index and internal rate of return (IRR). Which project or projects should be accepted if they are independent? Which project should be accepted if they are mutually exclusive?