Assume that it costs $1000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year, find the pay back period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitable index (PI) for this project.

Q: c. Using the MIRR and a cost of capital of 10.0%, would you take the project? a. How many IRRS does…

A: The modified internal rate of return is used in capital budgeting to evaluate the profitability of…

Q: every year for 4 years required Return is 15% the required. Payback is 3 years. Please use formula.…

A: In order  to make capital budgeting decision considered different area of financial decision and…

Q: Calculate the Profitability Index for Project A A firm is considering the following mutually…

A: The profitability index is used to determine the attractiveness of an investment. It is computed by…

Q: Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate…

A: Profitability Index is also known as PI. It is a capital budgeting technique which helps in decision…

Q: Your company is considering a capital project that will require a net initial investment of…

A: Solution:- Internal Rate of Return (IRR) means the rate of return the project is yielding. At IRR,…

Q: You invest in a project that is expected to generate fixed annual cashflows for 4 years beginning in…

A: The movement of funds into and out of a financial system or firm over a predetermined length of time…

Q: a) Consider a project that costs $100 million today and generates a cash flow of $106 million in one…

A: Internal rate of return (IRR) of an alternative refers to the rate at which the Net present value…

Q: Today (t=0), you invested the starting prinipal of 1536 dollars. At the end of the first, second and…

A: NPV is one of the capital budgeting method based on the time value of money and can be found as the…

Q: Project A has a NPV of $100 and will last for 10 years. Project B has an NPV of $75 and will last…

A: Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…

Q: Suppose you're presented with a proposal for a project that costs $4,300 and will bring in $20,200…

A: Net present value is the most important method of capital budgeting based on time value of money and…

Q: Consider a project with a 15 year time horizon (T=14). Suppose that in the first two years, the…

A: Time Period is 15 years(T=14) Project cost at t=0 is $175 and t=1 is $150 Net benefits at t=2 is $40…

Q: You are considering opening a new plant. The plant will cost $100.0 million upfront. After that, it…

A: NPV and IRR are both commonly used capital budgeting tools. NPV is the net present value used to…

Q: Growth Enterprises believes its latest project, which will cost $82,000 to install, will generate a…

A: With next year cash flow (C), constant growth rate (g) and discount rate (r), the present value of…

Q: You are considering opening a new plant. The plant will cost $100.3 million up front and will take…

A: Capital budgeting is a decision-making technique that aids in determining the viability of the…

Q: Suppose you are considering a project has an initial cost of $500 that has an ongoing benefit of…

A: The objective of the question is to calculate the Net Present Value (NPV), the Benefit Cost Ratio…

Q: Consider an investment in which a developer plans to begin construction, of a building that will…

A: Discount rate=10%Growth rate=5%

Q: What is the profitability index of a project that costs $87 and returns $42 annually for 8 years if…

A: Introduction Profitability Index As the word states, PI(Profitability index measures the ratio…

Q: You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it…

A: NPV and IRR are both commonly used capital budgeting tools. NPV is the net present value used to…

Q: Beene Distributing is considering a project that will return $235,000 annually at the end of each…

A: Solution:-When an equal amount is paid each period at end of period, it is known as ordinary…

Q: ​(Payback​period, NPV,​ PI, and IRR calculations​) You are considering a project with an initial…

A: Step 1: Step 2: Step 3: Step 4:

Q: Project A has a NPV of $100 and will last for 10 years. Project B has an NPV of $75 and will last…

A: Equivalent annual cost refers to the cost incurred for owning, operating, and the maintenance of an…

Q: Your company is considering a capital project that will require a net initial investment of…

A: Initial investment = $244,978 Period of project = 7 years Annual net cash inflows = $40,860

Q: You have the choice to invest in a related project at time T+1. The required investment is $10…

A: Present value refers to the current value of future cash flows or payments, discounted to reflect…

Q: Please answer the following questions using the information below: NPV. Using a 10% required rate…

A: Profitability Index or PI refers to the ration between aggregate worth of inflows and corresponding…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.