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Mrs Alis is an intelligent business woman. She makes her investments after a very thoughtful process. In January 2018 , her manager has shown her some projects with the following details
Option A
Investment into a towel business that initially cost $200,000 and then will generate
Option B
Investment into a detergent business that initially cost $190,000 and then will generate cash inflow of $20,000 for each of next 12 years.
The
- Calculate
net present value (NPV) andinternal rate of return (IRR) of both the investments. - Comment on which investment Mrs Alis should pick on the basis NPV and IRR.
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- Ali is an intelligent business woman. She makes her investments after a very thoughtful process. In January 2018 , her manager has shown her some projects with the following details Option A Investment into a towel business that initially cost $200,000 and then will generate cash inflow of $24000 per year for the next 10 years Option B Investment into a detergent business that initially cost $190,000 and then will generate cash inflow of $20,000 for each of next 12 years. The rate of return associated with both the investments is 12%. Calculate Payback period, discounted payback period, profitability index, net present value (NPV) and internal rate of return (IRR) of both the investments. Rank the projects based on each evaluation criteria. Comment on which investment Mrs. Ali should pick on the basis NPV and IRR.Ali is an intelligent business woman. She makes her investments after a very thoughtful process. In January 2018, her manager has shown her some projects with the following details Option A Investment into a towel business that initially cost $100,000 and then will generate cash inflow of $14000 per year for the next 10 years Option B Investment into a detergent business that initially cost $90,000 and then will generate cash inflow of $10,000 for each of next 12 years. The rate of return associated with both the investments is 11%. Calculate net present value (NPV) and internal rate of return (IRR) of both the investments. Comment on which investment Mrs Alis should pick on the basis NPV and IRR.Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for cash inflows that come JUST in year 6? Enter your answer to three decimals.
- Explain well with proper step by step and type The Answer.Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Nicole expects that she and two family members will each contribute $10,000 to the business and receive 1,000 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2021: Cash on hand and in the bank, $2,250; amounts due from customers from spa treatments, $1,790; building and equipment, $71,000; amounts owed to beauty supply outlets for spa equipment, $4,670; notes payable to a local bank for $38,970. Cash dividends of $3,000 will be paid to the stockholders during the year. Nicole also forecasts that first-year sales revenues will be $43,600; wages will be $24,500; the cost of supplies used up will be $7,500; office expenses will be $5,500; and income taxes will be $1,700. Required: Based on Nicole's estimates, prepare a (forecasted) CREATE A INCOME STATEMENT, RETAINED EARNINGS AND BALANCE SHEET for Nicole's Getaway Spa for the year ended…Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Nicole expects that she and two family members will each contribute $10,000 to the business and receive 1,000 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2021: Cash on hand and in the bank, $2,850; amounts due from customers from spa treatments, $1,850; building and equipment, $77,000; amounts owed to beauty supply outlets for spa equipment, $4,730; notes payable to a local bank for $39,570. Cash dividends of $2,000 will be paid to the stockholders during the year. Nicole also forecasts that first-year sales revenues will be $58,200; wages will be $27,500; the cost of supplies used up will be $10,500; office expenses will be $8,500; and income taxes will be $2,300. CC1-1 (Algo) Part 1 Required: 1. Based on Nicole's estimates, prepare a (forecasted) income statement for Nicole's Getaway Spa for the year ended December 31, 2021. NICOLE'S…
- James Smith is a financial adviser at a reputable financial institution in Jamaica. He was the keynote speaker on financial management at a recent conference and was asked questions on the time value of money. James is asking you to provide the answers to the following questions asked by the attendees at the conference. Sandra is currently saving $1,250 each month at 12% per annum. How much money will be in her account at the end of 5 years? 2. How much money should Anny invest today, so that she will have $10,500 in her bank account in four years’ time, assuming that the interest rate is 5% compounded annually? 3. A typical credit card agreement quotes an interest rate of 15% per annum. Monthly payments are required. Calculate the actual interest rate that will be paid on such a credit card (i.e. EAR)?Jacob has an opportunity to invest in a new retail development in his building. The initial investment is $50,000 and the expected cash flows are as follows: Year 1: $2,500; Year 2: $5,000; Year 3: $5,000; Year 4: $7,500; Year 5: $10,000; Year 6: $10,000; Year 7: $15,000 and Year 8: $15,000. What is Jacob's IRR on this investment? Select one: Select one: O 7.67% O 6.34% O 5.56% O 4.99%Mrs. Collins wants to start a clothing business. He plans to invest Gh₵ 30,000 of his savings into the new business. She thinks that some additional finance will be required in the short term and plans to approach his bank for this. Mrs. Collins asks for your assistance in producing a cash budget for his new business for the next six months (i.e., January – June, 2021). She provides the following information: The business, which is to be called ‘Pink Lady Clothing’ will commence in January 2021.Non-current assets costing Gh₵ 10,000 will be bought in early January. These will be paid for immediately and are expected to have a five-year life, at the end of which they will be worthless.An initial stock (inventory) of goods costing Gh₵ 6,000 will be bought and paid for at the beginning of January.Mrs. Collins is estimating that the goods she expects to sell in January will be replaced by purchases made in January, and so on. The following are monthly sales forecast: January February March…
- Mr. Ali is a telecommunication engineer working in Omantel. He is 45 years old, married with two children. He is considered one of the best in his company, and is likely to get many promotions. He expects that every year he will be able to save at least 6000 Rials 1. What should be Mr. Ali's investment objectives? 2. Are there any investment constraints Mr. Ali should consider. 3. What kind of an investment strategy (asset allocation) do you suggest for Mr. Ali ? Cash (%) Bonds (%) Equity (%)You found that opening your own cake shop is a worthwhile project. After scouting around you found out that you will need an initial capital of P50,000.00. Your estimate of the net cash flow for the next four years are as follows: Year 1: P20,000.00 Year 2: 25,000.00 Year 3: 25,000.00 Year 4: 30,000.00 Will pursue opening your cake shop?Gordon has a goal of purchasing a new second hand car valued at approximately $14,000 financed from the returns generated on his investments over the next 12 months. He currently has approximately $150,000 available for investment and wishes to select any one of the following alternative investments in order to realise his goal: Expected Income return (% p.a.) Details 1 year unsecured bank note 10 1 bedroom rental property 4 Shares in Australian bank 3 Expected Capital return (% p.a.) 0 8 12 Ignore the effects of taxation in your calculations. (a) Calculate the expected amount of income and capital generated by each investment over the next 12 months (b) Rank the investments in the order of their total return (expressed as a dollar amount) from the highest to the lowest