Parts D, E and F. **Investment Portfolio Optimization - Educational Analysis**In addition to the original opportunity statement, CustomMetalworks has determined that investments 3 and 4 are mutually exclusive, and investment 5 is contingent on either investment 1 or 2 being funded.- **d. Selection of Alternatives:** Identify which investment alternatives should be selected given the conditions outlined.- **e. Present Worth Calculation:** Determine the present worth of the optimum investment portfolio.- **f. IRR Calculation:** Calculate the Internal Rate of Return (IRR) for the optimum investment portfolio.**Reevaluation of the Original Problem:**- **g. Determine the Optimum Portfolio with Varied Capital Limits:** Identify the optimum portfolio (including selected investments and their present worth) using the following capital limits: (1) the current limit on investment capital, (2) a limit increased by 20%, and (3) a limit decreased by 20%.- **h. Determine the Optimum Portfolio with Varied MARR:** Identify the optimum portfolio (stating the investments selected and their present worth) using the following Minimum Attractive Rate of Return (MARR): (1) the current MARR, (2) a MARR of 14.4%, and (3) a MARR of 9.6%. **12.02-PR004** CustomMetalworks is considering the expansion of their cable fabrication business for towers, rigging, winches, and many other uses. They have available $250,000 for investment and have identified the following *indivisible* alternatives, each of which will provide an exit with full return of the investment at the end of a 5-year planning horizon. Each year, CustomMetalworks will receive an annual return as noted below. MARR is 12%.| Investment | Initial Investment | Annual Return ||------------|--------------------|---------------|| 1 | $25,000 | $7,500 || 2 | $40,000 | $12,000 || 3 | $85,000 | $20,000 || 4 | $100,000 | $22,000 || 5 | $65,000 | $17,000 |For the original problem:a. Which alternatives should be selected by CustomMetalworks?b. What is the present worth for the optimum investment portfolio?c. What is the IRR for the optimum investment portfolio?

5 indivisible projects are given below:Each investment will provide an exit with full return of the…

12.02-PR004 CustomMetalworks is considering the expansion of their cable fabrication business for towers, rigging, winches, and many other uses. They have available $250,000 for investment and have identified the following indivisible alternatives, each of which will provide an exit with full return of the investment at the end of a 5-year planning horizon. Each year, CustomMetalworks will receive an annual return as noted below. MARR is 12%. Investment Initial Investment Annual Return 1 2 3 4 5 $25,000 $40,000 $85,000 $100,000 $65,000 $7,500 $12,000 $20,000 $22,000 $17,000 For the original problem: a. Which alternatives should be selected by CustomMetalworks? b. What is the present worth for the optimum investment portfolio? c. What is the IRR for the optimum investment portfolio?

12.02-PR004 CustomMetalworks is considering the expansion of their cable fabrication business for towers, rigging, winches, and many other uses. They have available $250,000 for investment and have identified the following indivisible alternatives, each of which will provide an exit with full return of the investment at the end of a 5-year planning horizon. Each year, CustomMetalworks will receive an annual return as noted below. MARR is 12%. Investment Initial Investment Annual Return 1 2 3 4 5 $25,000 $40,000 $85,000 $100,000 $65,000 $7,500 $12,000 $20,000 $22,000 $17,000 For the original problem: a. Which alternatives should be selected by CustomMetalworks? b. What is the present worth for the optimum investment portfolio? c. What is the IRR for the optimum investment portfolio?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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