8. Cecil, the chief operating officer of Ninth Street Bank, has received proposals for four projects, each of which will cost initially $1,000,000. Given other priorities in the bank, he has decided that the company will only approve one of these projects. Knowing the bank has a hurdle rate of 10%, he is evaluating each of these projects based on the forecasts below. Although each of the projects has different characteristics, he decides to pursue _______________. New Branch: This new branch is unusual because Cecil anticipates it will only be open for 5 years before the area it serves converts to on-line banking. He believes the new branch will have first year profits of $250,000 and he forecasts those profits will grow 12% each year over the life of the branch.New Tech Soft: This tech investment is primarily software oriented and focused on making the bank more efficient. In looking at this tech, Cecil realizes that this type of software is changing rapidly, so he expects that the useful life of this investment will only be four years. During that time, he believes that the software will save the bank $250,000 in each of the first two years. However, he forecasts that the savings will increase 25% in each of the remaining years.New Tech Hard: This tech investment is primarily hardware oriented and is focused on making it more convenient for downtown customers to bank with Ninth Street. In forecasting this project, Cecil’s team is convinced that the hardware will have a useful life of three years in its proposed use. However, they also believe they can sell it to a rural bank for $250,000 at the end of Ninth Street’s use. The forecasts show that this project will earn the bank $400,000 in year one, but will not likely grow in the remaining years.New Marketing: In this project, the team proposes to develop an aggressive marketing campaign targeting small business owners. The initial investment will provide all the collateral materials and new product design for this target market. In addition to the initial investment, the project forecasts spending $200,000 each year to refresh all these materials. The forecast anticipates that the bank will make $400,000 in the first year from this project and shows that this profit should grow 15% each year due to these efforts. Although the campaign could have long-term residual benefits, Cecil decides to evaluate it only from the benefits the bank receives for the next five years. Please solve with excel. if you can.Group of answer choicesa. New Tech Softb. New Tech Hardc. New Marketingd. New Branch

Present Worth: It represents the present value of future costs and benefits arising from a project.…

Answered: Although each of the projects has…

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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8. Cecil, the chief operating officer of Ninth Street Bank, has received proposals for four projects, each of which will cost initially $1,000,000. Given other priorities in the bank, he has decided that the company will only approve one of these projects. Knowing the bank has a hurdle rate of 10%, he is evaluating each of these projects based on the forecasts below. Although each of the projects has different characteristics, he decides to pursue _______________.

New Branch: This new branch is unusual because Cecil anticipates it will only be open for 5 years before the area it serves converts to on-line banking. He believes the new branch will have first year profits of $250,000 and he forecasts those profits will grow 12% each year over the life of the branch.
New Tech Soft: This tech investment is primarily software oriented and focused on making the bank more efficient. In looking at this tech, Cecil realizes that this type of software is changing rapidly, so he expects that the useful life of this investment will only be four years. During that time, he believes that the software will save the bank $250,000 in each of the first two years. However, he forecasts that the savings will increase 25% in each of the remaining years.
New Tech Hard: This tech investment is primarily hardware oriented and is focused on making it more convenient for downtown customers to bank with Ninth Street. In forecasting this project, Cecil’s team is convinced that the hardware will have a useful life of three years in its proposed use. However, they also believe they can sell it to a rural bank for $250,000 at the end of Ninth Street’s use. The forecasts show that this project will earn the bank $400,000 in year one, but will not likely grow in the remaining years.
New Marketing: In this project, the team proposes to develop an aggressive marketing campaign targeting small business owners. The initial investment will provide all the collateral materials and new product design for this target market. In addition to the initial investment, the project forecasts spending $200,000 each year to refresh all these materials. The forecast anticipates that the bank will make $400,000 in the first year from this project and shows that this profit should grow 15% each year due to these efforts. Although the campaign could have long-term residual benefits, Cecil decides to evaluate it only from the benefits the bank receives for the next five years. Please solve with excel. if you can.

Group of answer choices

a. New Tech Soft

b. New Tech Hard

c. New Marketing

d. New Branch

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