1.Assuming you are facing with making a decision on a large capital investment proposal. the capital investment amount is $ Estimated the study period is years .The annual revenue at the end of each year is $ and the estimated annual year-end expense is $. starting in year Assuming a market value at the end year is $ and the benchmark rate is 10%, please answer the following questions: 1.Please design this investment project to fill the proper number in blank space to let the project is feasible in economics( 2.To give the cash flow chart of the project(
1.Assuming you are facing with making a decision on a large capital investment proposal. the capital investment amount is $ Estimated the study period is years .The annual revenue at the end of each year is $ and the estimated annual year-end expense is $. starting in year Assuming a market value at the end year is $ and the benchmark rate is 10%, please answer the following questions: 1.Please design this investment project to fill the proper number in blank space to let the project is feasible in economics( 2.To give the cash flow chart of the project(
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:### Investment Decision-Making Exercise
1. **Assuming you are faced with making a decision on a large capital investment proposal. The capital investment amount is $________, Estimated the study period is _____ years. The annual revenue at the end of each year is $________, and the estimated annual year-end expense is $_______ starting in year _____. Assuming a market value at the end year is $________, and the benchmark rate is 10%, please answer the following questions:**
1. Please design this investment project to fill the proper number in blank space to ensure the project is feasible in economic terms (________).
2. Provide the cash flow chart of the project (________).
In this exercise, participants are required to analyze a capital investment proposal by filling in the missing financial parameters. They will also need to create a cash flow chart to assess the economic feasibility of the proposed investment. By calculating and filling in the appropriate numbers, students will demonstrate their understanding of financial principles and investment analysis.
### Detailed Guide
- **Capital Investment Amount**: The initial cost required to start the project.
- **Study Period**: The total duration over which the project will be assessed.
- **Annual Revenue**: The consistent income expected to be generated at the end of each year.
- **Annual Year-End Expense**: The regular costs expected to be incurred annually at the end of each year.
- **Market Value at End Year**: The anticipated value of the investment at the end of the study period.
- **Benchmark Rate**: A standard rate (10% in this case) used for comparison to assess the investment's return.
### Cash Flow Chart
Creating a cash flow chart involves plotting out expected inflows and outflows of cash over the study period. This helps in visualizing the project's financial health over time and determining the net present value (NPV) and internal rate of return (IRR) to make informed investment decisions.
*(There are no graphs or diagrams included in the image that need explaining)*
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