Alternative 1 Alternative 2 Capital investment $4,500 $6,000 Annual revenues $1,600 $1,850 Annual expenses Estimated market $400 $800 $500 $1,200 value Useful life 8 years 10 years
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Consider these two alternatives. Solve, a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 15% per year. b. Determine the life of Alternative 1 for which the AWs are equal.
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- Year 0 $10,000.00 1 $ 3,000.00 Project A Cash Flow Project B Cash Flow $11,000.00 $5,000.00 2 $ 4,000.00 $ 4,000.00 3 $ 5,000.00 $ 4,000.00 4 $3,000.00 $ 3,000.00 Assuming that the relevant cost of capital for both projects is 10%, you should be able to determine the net present value (NPV) and the internal rate of return (IRR) for both project. Assume now that the firm has capital rationing, but knows that its true reinvestment rate is 21%, while its cost of capital is 10 percent. Given this information, determine the modified net present value (MNPV) for Project A. $3,811.27 O $3,622.02 O $4,280.07 O $4,162.90 O $4,404.83Year Investment A 2016 $400.000 2017 $400.000 2018 $400.000 2019 $400.000 2020 $400.000 Investment B $100.000 $100.000 $100.000 $1.000.000 $1.000.000 calculate the Npv of both projectInternal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?
- Find the value X such that the project's rate of return would be equal to 15% End of Year Cash Flow $-3,000 $1,330 X 1 2 3 $1,930 Select one: a. $760 b. $620 c. $530 d. $840Year Investment $13,000 $10,000 Cash Inflow $1,000 $2,000 $2,500 $4,000 $5,000 $4,000 $5,000 $4,000 $3,000 $2,000 Determine the Payback Period. 1234567899Question 1: For the given data which alternative is better using present worth analysis? Use i- 12% A $10,000 $4500 Initial Cost $12,000 $15,000 $4950 $4800 $400 $4500 Annual benefit Annual O&M cost $450 $375 Salvage value Useful life $2500 $4000 2 4 $ 3P86.24 -4.617.29 3.992.35 $ 357871 $ 2,132 55 What is PW of Alternative A? What is PW of Alternative B? -8.092.50 What is PW of Alternative C?
- thapter 4 Quiz Saved 1 An engineer at Suncore Micro, LLC calculated the present worth of mutually exclusive bundles, each composed of one or mere independent projects. Select the acceptable bundle if the capital investment limit is $50,000 and the MARR is 15% per year. Project Bundle Initial Investment PW, $ 1 -27,000 2400 2. -33,000 9200 3. -44,000 7300 00:29-46 4 -51,000 11,400 -66,000 10,800 HIE Select bundle (Click to select) vQuestion 16 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project: A B C . Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500…Question 15 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project: A B C . Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500…
- QUESTION 5Read the information below and answer the following questionsINFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you:PROJECT COS PROJECT TANNet Profit Net ProfitYear R R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method.5.4 Benefit Cost Ratio of Project Cos (expressed to three decimal places). 5.5 Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION.Question 12 research laboratory which requires P5,000, 000 for original Determine the capitalized cost of construction; P100, 000 at the end of every year for the first 5 years and then P120, 000 each year thereafter f or operating expenses, and P500,000 every 6 years for replacement of equipment with interest at 12% per annum? OA6,441,350 O B.6,067,015 OC 6,632,445 8,573,650ס E, None of the above Question 12 of 50 A Moving to another question will save this response. acer PrtSc Pause Del Home Pg U F7 F8 F9 F10 F11 F12 F3 F4 F5 F6 SysRq Scr Lk Break Ins DIO Backspace 7 8.Question 7 Chestnut Tree Farms has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$50,000 -$50,000 1 $35,000 $15,000 2 $8,000 $13,000 3 $7,000 $15,000 4 $6,000 $20,000 If forced to choose one of the two projects above, over what range of discount rates would you choose Project A? Group of answer choices 12.32 percent or less 12.32 percent or more 13.16 percent or less 13.98 percent or less 13.98 percent or more