Consider the following cash flow and calculate the NPV of the project with a discount rate of 10%. $1,00,000 a) -$17,200.85 b) -$12,500.20 c) -$21,985.70 d) -$14,428.00 $20,000 $20,000 $20,000 $20,000 $20,000 1 2 3 + 5
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- (1) Given that the benefit/cost ratio for project X is B/C(X) and that of higher ranked project Y is B/C(Y), then project Y will be preferred over X if the incremental benefit/cost ratio is greater than A. B/C(X) OB. B/C(Y) OC. One OD. Zero OE. MARR (2) Given that the internal rate of return for project X is IRR(X) and that of higher ranked project Y is IRR(Y), then project Y will be preferred over X if the incremental rate of return is greater than A. MARR OB. One OC. IRR(Y) OD. Zero OE. IRR(X)K Development projects done by Standalone Products are subsidized by a govemment grant program. The program pays 30 percent of the total cost of the project (costs summed without discounting Le, the interest rate is zero), half at the beginning of the project and half at the end, up to a maximum of $100,000. There are two projects being considered. One is a customized checkweigher for cheese products and the other is an automated production scheduling system. Each project has a service life of five years. Costs and benefits for both projects, not including grant income, are shown below. Only one can be done, and the grant money is certain, Standalone Products has a MARR of 9 percent for projects of this type. Using an appropriate rate of retum method, which project should be chosen? First cost Annual costs Annual benefits Salvage value Checkweigher $32,000 $4.800 $15,000 $8,000 Scheduler $9,000 $13,000 $18.000 SO The appropriate increment investment from one project to the other has an…Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The economic life of the project A will be 6-Year's and Project B will be 5 years, and both projects carry same risk, Batelco Inc uses a discount rate of 12%. After considering the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROI) 18%. A financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table: Cost of equipment Working Capital needed Overhaul of the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs Life of Project Projects A 240.000 60,000 12000 375,000 180.000 60.000 90,000 6 year Projects B 470.000 80,000 14000 300,000 90,000 74,000 70,000 5 years The working capital will be released 6th and 5th year of the project…
- Hint: You need to do the following three things; 1) PWC Old & PWC New 2) Incremental NPV 3) Incremental ROREconomics 7.11 Consider the projects given in Table P7.11. (a) Classify each project as either simple or nonsimple. (b) Identify all positive i*s for each project.The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Buildings and equipment, net Accounts payable Common shares Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June $50,000 $60,000 $72,000 $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 July $90,000 $48,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows:…
- Vermonto Ltd is putting together a tender for a one-off contract using relevant costing principles. The job requires 50m2 of Material X Vermonto has established the following information regarding material X: Material X Amount held 40m2 Original cost £25 per m2 Net realisable value £28 per m2 Current purchase price £30 per m2 Material X is no longer used by Vermonto for its ongoing operations and any existing inventories will be sold if not used. What is the relevant cost for material X for the purpose of pricing the contract?Consider the cashflow (n = 10 years, MARR = e = 14%) Cash Flow A Investment P 180,000 Revenues P 350,000 per year Expenses P 400,000 per year for the first 3 years, decreasing by P 50,000 per year thereafter a. Determine the Annual Worth (AW) of each project. b. Determine the Internal Rate of Return (IRR) of each project. c. Determine the External Rate of Return (ERR) of each project. Salvage Value P 40,000If the profit function for selling smart phone screen magnifier is -4500p2 + 561500p – 11898000, what is the maximum profit that can be expected from selling smart phone screen magnifiers? Question 1 options: $ 0, no profit $ 5,617,681 $ 1,717,764 -$ 8,004,171
- Q¹The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. What would the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 4% per year. E Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. The life of the project needs to be at least years in order to be cost-beneficial to the city. (Round up to the nearest whole number.)Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $760,000, has gross revenues of $118,000, annual O &M costs of $23,000 and a service life of 20 years. What is the project's discounted payback period if the MARR is 8% per year? OA. 8.3 years OB. 13.3 years O C. 16.7 years OD. 9.4 years If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback period? OA. The first alternative OB. The second alternative