4. Kangaroo and Kimiti Co.Ltd is attempting to evaluate the feasibility of investing tshs 95 million in a equipment with a five year lifespan. The company has estimated the profits after taxes and cash associated with the project as follows: Year Cash flow("000") Profit after taxes("000") 1 2 3 4 5 5000 3000 9000 14000 19000 The company has 12% cost of capital. 6/17/2021 8:05:06 PM 20000 25000 30000 35000 40000

4. Kangaroo and Kimiti Co.Ltd is attempting to evaluate the feasibility of investing tshs 95 million in a equipment with a five year lifespan. The company has estimated the profits after taxes and cash associated with the project as follows: Year Cash flow("000") Profit after taxes("000") 1 2 3 4 5 5000 3000 9000 14000 19000 The company has 12% cost of capital. 6/17/2021 8:05:06 PM 20000 25000 30000 35000 40000

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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The business is considering a project and is not sure which of these two projects to embark on. The initial investment is £15,000, and the interest rate is 2%, estimating that the investment will provide the following cashflows for 5 years: Project A (£) Project B (£) CF1 2,000 5000 CF2 8000 6000 CF3 9000 1000 CF4 3000 4000 CF5 5000 2400 You must explain to the Board the viability of this investment using the net present value (NPV) criterion. Based on the above information, answer the following question • What is the NPV of each investment? • Is the investment viable? If yes, why? Simple Interest and Compound Interest 1. One of the directors suggested that the company invests £4200 in a Platinum Saver Account which pays 6.3% interest per annum. How much simple interest will the company receive after 4 years? 2. He also suggested investing £1200 for four years, and wondered how much that investment will be worth if they paid 12%…
A startup company has a fixed capital investment of Ph 500,000 and minimum working capital. The salvage value is set at Php 15,000. Calculate the a) Return on Investment and b) the Payback Period. If the mar is 25%, is the project profitable or not? Year After Tax Earning 1 201079.1 2 49051.48 3 145381.1 4 89021.41 22509.13 221273.2 7 134490.4 8 273262 9 146166.3 10 63456.84
HSJ Foods is getting ready to produce a new line of products by investing 185000 OMR. The investment will result in additional cash flows of 52500 OMR , 81250, and 120000 over the next three years. What is the payback period for this project? Select one: a. 1.53 years b. 1.84 years c. 2.62 years d. None of these e. 2.42 years
Arenas Enterprise is considering to invest in one of the three projects. The projects are as follows: Project Name Icarus Lazarus Potus Initial Investment RM1.0 million RM1.5 million RM2.5 million Expected Return (%) 14 17 12 The company is planning to finance the project through equity and debt, 40 percent and 60 percent respectively. For the first RM800,000 the after-tax cost of debt would be 9 percent and any additional funds to be raised by debt would incur 10 percent cost. The company has retained earnings of RM900,000 with a required rate of return of 15 percent. The cost of issuing new common stock is 20 percent. a) Construct the weighted marginal cost of capital
Bills Corporation is contemplating on a project. It has an initial investment of Php5 Billion and will generate cash flows of Php 7 Billion 5 years from now. a) How much is the present value of the project if the cost of capital is 10.50%? Compute for present value and net present value
M& B is considering investing in Project X which requires an initial investment of P15,000. The firm`s cost of capital is 9%. The project is expected to last for six years and provide an annual cash flow of P3,000. What is this projects breakeven cash flow? A. P3,434.00 B. P3,334.00 C. P3,344.00
Bunnings Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below.Equipment 1 Equipment 2Cost $186,000 $195,000Future Cash FlowsYear 1Year 2Year 3Year 4Year 586 00093 00083 00075 00055 00097 00084 00086 00075 00063 000Identify which option of equipment should the company accept based ondiscounted pay back method if the payback criterion is maximum 2 years?
1. What is the profitability index of a project that costs $90,000 and returns $30,000 annually for 8 years if the opportunity cost of capital is 9.6%? a.0.64 b.0.80 c.1.76 d.1.05 e.1.26 2. King Corporation is planning a 15-year project with an initial investment of $2,013,000. The project will have $563,000 cash inflows per year in years 1-2; $166,000 cash inflows in years 3-10, and $57,000 cash inflows in years 11-15. Determine the project's internal rate of return (IRR). Using financial calculator a.6.87% b.5.72% c.4.58% d.10.30% e.8.24%
Provide answer
5
3. A company is considering investing £46,000 in a machine that will be operated for 4 years, after which time it will sell for £4,000. Depreciation is charged on a straight line basis. Forecast operating cashflows are £28,000, £35,000, £25,000 and £9,000. What is the Payback Period and the ARR based on average investment? PP ARR A 1.5 years 52% B 2.4 years 55% C 2.4 years 52% D 1.5 years 55%
Raisons Reels Pty Ltd is considering investing in the purchase of new equipment The equipment will cost $350 000 There will be net cash inflows in each of the three years of: Year 1: $140 000, Year 2: $160 000 and Year 3: $122 000 The equipment is thought to have a residual value of $60 000 at the end of year 3 The required rate of return (RRR) is 14% 4.The Accounting Rate of Return (ARR) for this investment is: 5. Which of the following statements is true regarding the decision rule for ARR? 6. A qualitative feature of investments is:

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