Compare the following two alternatives by the IRR method, given MARR of 6%/year. First find if theyare feasible and then compare them with the incremental rate of return (AROR).Alt.Construction cost $Benefits $/yr Salvage $Service Life (yrs)A410,00055,00020,00011B250,00035,00010,00011

The internal rate of return (IRR) is a discounted cash flow method for calculating the rate of…

Answered: Compare the following two alternatives…

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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Any suggestions? Thanks for the help! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. 2. The better alternative between the second increment is ___________________.
10. You must choose one of the 2 project proposals below. Interest rates are 10%. Which of these projects is the most attractive? Initial cost Salvage value Operating costs Maintenance costs life A 650,000 17,000 50,000 per year 120,000 per year 10 B 4,000,000 0 5,000 per year $30,000 every 5 years infinite
Use an 8-year analysis period and a 10% interest rate to determine which of the alternatives below should be selected. What is the NPV of both alternatives and which should be selected. 1 First Cost Uniform Annual Benefit $5,300 $1,800 4 $10,700 $2,100 8 Useful Life in Years
1. Compare the following alternatives using the Net Present Worth (NPW) method. Rate 5% per year. Construction $ Benefits $/yr Life years A 400,000 200,000 5 700,000 220,000 10 2. Solve the same problem using the Net Equivalent Uniform Annual (NEUA) method. What do you conclude?
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5. Compare the following 2 alternatives with a method of your choice. The market rate is 6% and inflation is expected to run at 2.5% per year. Alt A B Construction cost $ Benefits $/yr 450,000 380,000 2,000,000 1,500,000 Salvage 200,000 150,000 Life (yrs) 12 9
Alternative A B C which to choose.
Windswept, Inc.2017 Income Statement($ in millions) Net sales $ 11,000 Cost of goods sold 8,200 Depreciation 395 Earnings before interest and taxes $ 2,405 Interest paid 110 Taxable income $ 2,295 Taxes 689 Net income $ 1,606 Windswept, Inc.2016 and 2017 Balance Sheets($ in millions) 2016 2017 2016 2017 Cash $ 420 $ 445 Accounts payable $ 2,060 $ 2,005 Accounts rec. 1,210 1,110 Long-term debt 1,120 1,580 Inventory 1,980 1,820 Common stock 3,460 3,190 Total $ 3,610 $ 3,375 Retained earnings 700 950 Net fixed assets 3,730 4,350 Total assets $ 7,340 $ 7,725 Total liab. & equity $ 7,340 $ 7,725 What were the total dividends paid for 2017?
Solve c) What is the payback period (PB) for this project?
Urgently need
Question No. r The following information is provided for five mutually exclusive alternatives that have 20-year useful lives. If the minimum attractive rate of return is 6%, which alternative should be selected using IROR Method? Alternatives B Cost 4,000 2,000 6,000 1,000 9,000 Uniform Annual Benefit 639 410 761 117 785 IROR 15% 20% 11% 10% 6% IROR (B-D) IROR (A-D) IROR (A-B) IROR (C-B) IROR (C-A) IROR (E-C) IROR (E-A) -5% 29% 18% 10% 9% 2% 14%
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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