A Facility Manager is evaluating the installation of Inverter type airconditoning in his facilities (to replace hiscurrent non inverter type). The cost of the inverter air conditoning system is P 90,000. Current electricity billis averaging P 40,000 per month and the Facility Manager estimates that he will save 10% of this cost if he proceedswith the project. He thinks the new acu unit will be good for 5 years. Calculate thea. Average Payback Periodb. NPV at a discount rate of 10%c. IRRd. BCRShould the FM proceed with the project?

Pay back period is period required to recover initial amount of investment and normally should be…

A Facility Manager is evaluating the installation of Invert current non inverter type). The cost of the inverter air c is averaging P 40,000 per month and the Facility Manag with the project. He thinks the new acu unit will be goo a. Average Payback Period b. NPV at a discount rate of 10% C. IRR d. BCR Should the FM proceed with the project?

A Facility Manager is evaluating the installation of Invert current non inverter type). The cost of the inverter air c is averaging P 40,000 per month and the Facility Manag with the project. He thinks the new acu unit will be goo a. Average Payback Period b. NPV at a discount rate of 10% C. IRR d. BCR Should the FM proceed with the project?

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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You are evaluating a project for The Farpour golf club, guaranteed to correctthat nasty slice. You estimate the sales price of The Tiff-any to be $400 per unitand sales volume to be 1000 units in year 1; 1500 units in year 2; and 1325units in year 3. The project has a three-year life. Variable costs amount to $225per unit and fixed costs are $100,000 per year. The project requires an initialinvestment of $165,000 in assets which will be depreciated straight-line to zeroover the three-year project life. The actual market value of these assets at theend of year 3 is expected to be $35,000. NWC requirements at the beginning ofeach year will be approximately 20 percent of the projected sales during thecoming year. The tax rate is 34 percent and the required return on the project is10 percent. What change in NWC occurs at the end of year 1?
1.
What is the estimated Internal Rate of Return (IRR) of the project?Should the project be accepted based on the IRR?
NPV?
A firm by the name “Modern Nursing Care” is considering two projects for investment in biomedical plant. Based on the payback period method suggest which is a better investment choice.Project –A-Initial investment- 200000$, Cash inflows- 500000$ per year, life of project 8 years.Project-B-Initial investment-250000$, Cash inflows-25000$ per year, life of project 12 years.
Without using exel
calculate the Net present value for all three projects, the WACC (discount factor) is 4.25% pick which project is the best one, please show all your working out if possible thankyou and have a nice day :)
A firm requires a payback period of 2 years or less. According to the payback period rule, which of the following projects is acceptable to this firm? Year Project A Project B Project C 0 -$86 -$128 -$77 1 30 40 100 2 40 20 -50 3 50 10 4 60 130 a. If you use payback period as a decision rule, you would choose (No answer given) Project A Project B Project C
Consider the three mutually exclusive projects that follow. The firm’s MARRis 10% per year. Solve, a. Calculate each project’s PW. b. Determine the IRR of each project. c. Which project would you recommend? d. Why might one project have the highest PW while a different project has the largest IRR?
A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10% a. Using Benefit- Cost analysis, what is the Benefit/Cost ratio for this equipment purchase? b. Based on the Benefit/Cost analysis should Metro Atlanta purchase the equipment?
In planning the establishment of MOCAF flour mill facilities there are several alternatives as follows: (x Rp million,-) Alternative I Alternative Il Alternative III Initial investment 4.000 6 200 Annual net receipts 800 1260 Final score 0 400 Economic age 10 years. 10 years If the MARR is 12% per year, look for the best alternative with the method: a. Net Present Value b. IRR 7 600 1 500 600 10 years
Two mutually exclusive investment altematives for implementing an office automation plan in an engineering design firm are being considered. If the firm's MARR is 10% per year, which alternative should be selected? Compare the alternatives shown below on the basis of Incremental Analysis. Investment A Investment B Capital Investment, S Annual Expenses, S/yr. 920,000 660,000 167,000 133,000 Salvage value, S 410,000 330,000 Life, years 10 10 Determine IRR on incremental analysis, using 7% and 13% rates. Oa86% Ob 11.1% 10.9% Od.95%

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