Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost : 350000 Revenues : 150000 Costs : 55000 Salvage : 120000 n : 7 MARR : 0.1 a.1.4599 b.1.4101 c.1.6035 d.1.7354 e.1.6480

Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost : 350000 Revenues : 150000 Costs : 55000 Salvage : 120000 n : 7 MARR : 0.1 a.1.4599 b.1.4101 c.1.6035 d.1.7354 e.1.6480

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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Question

Calculate the modified benefit-cost ratio for the alternative:

Initial Investment Cost : 350000

Revenues : 150000

Costs : 55000

Salvage : 120000

n : 7

MARR : 0.1

a.1.4599

b.1.4101

c.1.6035

d.1.7354

e.1.6480

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Step 1: Formula.

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Step 2: Computation of present value of benefits.

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Step 3: Computation of present value of costs.

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Step 4: Computation of present value of salvage value.

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Step 5: Computation of modified Benefit costs ratio.

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Similar questions

Consider three mutually exclusive alternatives, each with a 15-year useful life. If the MARR is 12%, which alternative should be selected? Solve the problem by benefit–cost ratio analysis.
A cost analysis is to be made to determine what, if anything, should be done in a situation offering three "do-something" and one "do-nothing" alternatives. Estimates of the costs and benefits are as follows: End-of- Uniform Useful- Life Benefit Salvage (years) Value Useful First Alternatives Cost Annual Life -$500 $135 -600 100 250 5 -700 100 180 10 4 Use Present Worth Analysis with the Least Common Multiple Method to select the best alternative. Use MARR=6%. (Note: You MUST describe your answers with conversion factor notations and you DON'T NEED TO calculate the values of PW for supporting a decision. Simply describe your selection criterion with PW expressions.) 1.
Please do not give solution in image format thanku
Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230 Project C: IRR = 6%, Initial cost = 300, NPV = 300 Project D: IRR = 22%, Initial cost = 100, NPV = 260 If you can only choose 1 of the above projects above, which one should you choose? Project A Project B Project C Project D Not enough information to determine which project is preferred
The profitability analysis of three projects is provided below: Project A Project B Project C NPV $10,000 $5,000 - $1,000 IRR 10% 15% 15% WACC 8% 12% 16% If these projects were independent, which project(s) would be accepted? Why? If these projects were mutually exclusive, which project(s) would be accepted? Why?
Data Using Incremental with EUAW analysis find the best alternative, MARR = %10. You should use Excel and show your equations separately, see below example: [A Benefit - [IC (A/P, i%, n) - Salvage (A/F, i, n)] + A Cost+ G Cost (A/G, i, n)] First Cost Salvage Value Annual Benefit M&O M&O Gradient Useful Life, Years A $2,300,000 $85,000 $580,000 $65,000 $10,000 10 B $2,750,000 $125,000 $670,000 $78,000 $15,000 10 с $2,550,000 $95,000 $650,000 $72,000 $12,500 10
solve, dont use excel. dont write the answer in a paper becuse of the handwriting. thanks
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000

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