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2. Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering Investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three Independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $22 million to invest in new projects this year. Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 1 2 3 $ $ 15 7 15 12 a. Calculate the profitability Index for each Investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) 22 12 19 9.5 26 35 4.5 22 22 b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g.. 1,234,567.89) a. CDMA G4 WI-FI b. COMA G4 Wi-Fi Year 0 1 2 3 Show Transcribed Text Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 12 percent. Project Alpha -$6,300 3,200 3,100 1,900 Project Alpha Project Beta Project Beta -$7,900 1,800 6,300 4,900 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) c Profitability Index b.rule? Which project(s), if either, should the company accept based on the profitability index O Project Alpha O Both projects O Neither project O Project Beta

2. Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering Investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three Independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $22 million to invest in new projects this year. Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 1 2 3 $ $ 15 7 15 12 a. Calculate the profitability Index for each Investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) 22 12 19 9.5 26 35 4.5 22 22 b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g.. 1,234,567.89) a. CDMA G4 WI-FI b. COMA G4 Wi-Fi Year 0 1 2 3 Show Transcribed Text Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 12 percent. Project Alpha -$6,300 3,200 3,100 1,900 Project Alpha Project Beta Project Beta -$7,900 1,800 6,300 4,900 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) c Profitability Index b.rule? Which project(s), if either, should the company accept based on the profitability index O Project Alpha O Both projects O Neither project O Project Beta

Essentials Of Investments
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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2. Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering Investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three Independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $22 million to invest in new projects this year, Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 7 15 $ $15 1 2 3 a. CDMA G4 Wi-Fi b. CDMA a. Calculate the profitability Index for each Investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89) G4 Wi-Fi Year 0 1 2 3 12 9.5 4.5 12 26 22 Project Alpha -$6,300 $22 19 Show Transcribed Text 3,200 3.100 1,900 35 22 Project Alpha Project Beta Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 12 percent. Project Beta -$7,900 1,800 6.300 4,900 3 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability Index c O Project Alpha O Both projects O Neither project O Project Beta b. Which project(s), if either, should the company accept based on the profitability index rule?
Transcribed Image Text:2. Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering Investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three Independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $22 million to invest in new projects this year, Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 7 15 $ $15 1 2 3 a. CDMA G4 Wi-Fi b. CDMA a. Calculate the profitability Index for each Investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89) G4 Wi-Fi Year 0 1 2 3 12 9.5 4.5 12 26 22 Project Alpha -$6,300 $22 19 Show Transcribed Text 3,200 3.100 1,900 35 22 Project Alpha Project Beta Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 12 percent. Project Beta -$7,900 1,800 6.300 4,900 3 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability Index c O Project Alpha O Both projects O Neither project O Project Beta b. Which project(s), if either, should the company accept based on the profitability index rule?
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