A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.

A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 12E: Refer to Exercise 19.11. 1. Compute the payback period for each project. Assume that the manager of...

See similar textbooks

Similar questions

None
You've graduated from college and are now working in an investment firm where you advise clients on investment decisions. Here is the information on a proposed project. Up-front cost: $100,000 • Next year's revenue: $15,000 . Real interest rate: 7% • Depreciation rate: 3% ● How much profit does the project yield, and should your client invest in the project? No, the client should not invest because the project yields a $10,000 loss. Yes, the client should invest because the project yields a $50,000 profit. No, the client should not invest because the project yields a $15,000 loss. Yes, the client should invest because the project yields a $15,000 profit.
Your Question : Please introduction and correct and incorrect option explain!
You are a project manager for your company and you are faced with five potential projects that you can invest in. Free cash flow projections and additional relevant data are given for each project in the table below. Assume that there are no cash flows after year 3. Assume that you can only take each project once and that you can only choose one project. Which project would you invest in? Select the best answer. Project Project A Project B Project C Project D Project E O I. Project A II. Project B III. Project C IV. Project D O V. Project E FCF Forecasts by Year (in $1,000) 0 2 1 500 (400) (400) (300) (250) (300) 75 60 75 135 115 175 3 650 210 190 200 Interest Rate (EAR) 8.0% 10.0% 10.0% 12.0% 12.0% IRR 25.00% 17.57% 15.92% 17.81% 19.96%
Give me correct answer with explanation..j
The Weiland Computer Corporation is trying to choose between the following mutually exclusive design projects, P1 and P2: Year 0 1 2 3 Cash flows (P1) -$53,000 27,000 27,000 27,000 Cash flow (P2) -$16,000 9,100 9,100 9,100 If the discount rate is 10 percent and the company applies the profitability index (PI) decision rule, which project should the firm accept? If the firm applies the Net Present Value (NPV) decision rule, which project should it take? Are your answers in (a) and (b) different? Explain why?
A firm evaluates all its projects by applying the IRR rule. the current proposed project has a cash flow of negative 37,048 dollars, 16,850 15,700 and 19,300 for years zero to three, respectfully. The required return is 18%. what is the project IRR? should the products be accepted or rejected?
Los Pollos Hermanos is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. Your boss, Gus Fring, asks you which project will have the higher NPV. What do you respond? Year CFs CFL 2 -$1,100 $600 $500 -$1,100 $100 $300 3 $300 $500 OI cannot answer this question without the cost of capital O Project L Project S O The NPVs will be equal $100 $600
Pat's Place is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital (and even negative), in which case it will be rejected. Year 0 1 2 3 4 5 Cash flows −$9,500 $2,000 $2,025 $2,050 $2,075 $2,100 Group of answer choices
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,900 1 12,900 2 15,900 3 11,900 What is the NPV for the project if the required return is 11 percent? At a required return of 11 percent, should the firm accept this project? What is the NPV for the project if the required return is 25 percent?
please avoid solutions in an image format thank you
I NEED HELP ASAP! I NEED BOTH REQUIRMENT A AND B!