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- The UniMAP Holdings Group is considering investing RM10.0 million in a new shopping complex in Kangar, Perlis. The group has estimated that the shopping complex once built, will contribute RM1,250,000 per year for 10 years. The board of trustees of the group require that any new investment to be undertaken by the group should generate a required rate of return (MARR) of at least 12% per year of its investment. Assuming that at the end of 10 years period the shopping complex will retain about 60% of its initial investment as a salvage value. What should be the decision of the group on this proposed asset investment?The Bank of China is considering an application from the Government of the Republic of Zambia for a large dam project. Some costs and benefits of the project (in Kwacha values) are as follows: Construction costs: K500 million per year for three years Operating costs: K50 million per year Hydropower to be generated: 3 billion kilowatt hours per year Price of electricity: K0.05 per kilowatt hour Irrigation water available from dam: 5 billion liters per year Price of irrigation water: K0.02 per liter Agricultural product lost from flooded lands: K45 million per year Forest products lost from flooded lands: K20 million per year Assume that the project incurs no ecological and other costs besides the ones stated above. Do a formal cost-benefit analysis encompassing all of the quantifiable factors listed above. Assume that the lifespan of the dam is 10 years and that construction begins in Year 0. All other impacts start once the dam is completed and continue for 10 years. Use 5%…12. You can purchase a office building for $1.7 million. You expect the cash flow on the building to be $95,000 next year and believe it will grow by 5% each year. You expect to hold the building for 5 years and then sell it for $2 million. What do you expect the yield 10 on the building to be? If your required rate of return is 10%, should you buy the building? If your answer is not the buy the building for $1.7 million, what price would you pay? If your answer is to buy the building, how much more could you pay?
- 13. The IBC Company is considering undertaking an investment that promises to have the following cash flows Period 0 is = -$100 Period 1 is= $150 Period 2 is = $50 Period 3 is = $50 If it waits a year, it can invest in an alternative (that is, mutually exclusive) investment that promises to pay Period 1 Period 2 Period 3 −$150 $250 $50 Assume a time value of money of 0.05. Which investment should the firm undertake? Use the present value method and the internal rate of return approaches. With the IRR approach, use the incremental cash flows.53) Aira Company reported gross payroll of P600,000 for the month of January. The entity paid the payroll net of the following deductions: Income tax P80,000 20,000 SSS Philhealth 6,000 Pag-ibig/HDMF 8,500 In addition, the entity recognized its additional contributions for the following in relation to January payroll: SSS Philhealth P25,000 7,000 9,000 Pag-ibig/HDMF The net pay and mandatory deductions and contributions were paid on February. What is the total liability related to payroll for the month of January? (Note: TOTAL amount, include withheld amounts)
- 7. A company is considering purchasing equipment for a new product line. The initial investment is R1,500,000. The equipment needs an upgrade after 5 years, this will cost another R750,000. The incremental cashflows for the next 10 years will be R500,000 per year, starting from the end of the first year. The investment period is 10 years. The company's WACC is 12%. Calculate the NPV and the MIRR for the project. Should the company invest in the equipment?24. You are evaluating a project that will cost $534,000, but is expected to produce cash flows of $128,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 11% and your company's preferred payback period is three years or less. a. What is the payback period of this project? b. Should you take the project if you want to increase the value of the company? a. What is the payback period of this project? The payback period is ____years. b. If you want to increase the value of the company you (will/will not) take the project since the NPV is (negative/positive) **round to two decimal places**9
- The restaurant chain company ESTIASI Limited is considering the case of investing in a new restaurant which requires an initial cost of € 120,000. Cash inflows for the first two years are expected to be € 40,000, in the third year to increase to € 46,000 and in the fourth year to € 50,000. The annual capital cost of the company is 6%. Calculate the Net Present Value (CVA) of the investment10. The company Time has just completed the development of a smart watch. This new product is expected to produce annual revenues (constant) of 450.000€ and operating costs (constant) of 310.000€ starting from year 1. To realize the new product, an investment in a new equipment was required. The investment occurred at year 0, its value was of 680.000€ (immediately paid in cash at year 0) and the equipment is expected to be sold at the end of year 5 at 60.000€. The projected life cycle of the smart watch is of 5 years. The 60% of the investment is financed with equity capital (ke:8%), while the remaining part with third parties capital at a cost of 6%. By adopting an invested capital logic: O NPV: + 80.213 € ONPV: -80.213€ NPV: -66.652 € O NPV: 0 €1. Show your solutions completely. The ABC Freight Company has invested USD80,000 in a new sorting machine that is expected to produce a return of USD9,000 per year for the next 10 years. a.) At a 9% annual interest rate, is this investment worthwhile? b.) If the new machine was not purchased and the amount of USD80,000 was invested in another business that would give a 10% interest rate, what would be the equivalent future amount at the end of 10 years? Mr. Mason wants to open an account in a bank with a 3% interest rate, so he can withdraw after the 25th year the amount of USD4,500 each year for 5 years. a.) How much should he deposit now? b.) should he decide not to withdraw any amount after 25 years, and instead withdraw the whole amount at the end of the 30th year, how much can he withdraw assuming that the interest rate is uniform? c. If Mr. Mason wishes to withdraw the amount of USD4,500 each year for 5 years, beginning at the end of the first year after the making the initial…