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: Assuming you are facing making a decision on a large capital investment proposal. the capital…

A: To find the answers, we will first have organize the cashflows associated with the project. Please…

Q: or has an opportunity of borrowing sh. 1000,000 to buy a machine which will only last one year and…

A: Marginal  efficiency of capital is the more return on investment achieved than the normal rate of…

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: Consider an initial investment of $100 using an accumulation function which is a second-degree…

A: The accumulation function is a mathematical expression that defines the value of time with respect…

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: How much money could a fim borrow to finance a project if it is expected revenues of $240,000 yearly…

A: The time value of money states that the value of money received today will be worth more in the…

Q: 1. Given the two projects below, identify which of the two projects are worth pursuing. The required…

A:

Q: Consider a project that needs an investment outlay I at time t-0, with a constant annuity as returns…

A: The payback period is the time it takes to recover the cost of investment. Investors favor shorter…

Q: Question: A project pays $2000 today, costs $5000 a year from now, and pays $12, 500 in two years.…

A: Here, Cash inflow in year 0 is $2,000 Cash Outflow in Year 1 is $5,000 Cash Inflow in Year 2 is…

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: Perform a financial analysis for an IT Project which requires an initial investment of $32,000, but…

A: Present value = future value / (1+rate)^no. of years

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: You are considering opening a new plant. The plant will cost $98.52 million up front and will take…

A: Net present value and Internal rate of return are capital budgeting techniques used to evaluate…

Q: Illustration: An investment opportunity costs $10,000 and returns $5,000, $4,000, and $3,000,…

A:

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: A company that manufactures magnetic flow meters expects to undertake a project that will have the…

A:

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: Salalah Mills has taken up a new project with an initial investment of 30000 OMR.The expected future…

A: Given:

Q: You want to invest in a project that costs $4125.  The initial (Date 0) CF of the project is $75…

A: NPV of a project = Initial Outflow - Present value of future inflow of cash Given  Initial Outlay…

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: An operation manager expects that the new machine will generate the following streams of income:…

A: In this we have to calculate the present value of all cash flow.

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: A project has a rate of return of 23%. What is the future value of the project if the investment…

A: Future value is the future worth of cash flows that have occurred in the present or past.

Q: Salalah Wind Energy has taken up a new project with an initial investment of 50000 OMR.The expected…

A: The Profitability Index: The profitability index measures the quantum of the total present values of…

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.