For a proposed manufacturing plant, a fixed capital investment of P11,000,000 is required together with an estimated working capital of P2,500,000. Annual depreciation is estimated to be 10% of the fixed capital investment and annual profit is estimated to be P4,000,000. Based only on these given information, a. using the ROR method, what is the net annual profit of the project (in Php)? b. what is the rate of return of the proposed project (in %)? c. using the payback period method, what is the net annual cash flow of the project (in Php)?

For a proposed manufacturing plant, a fixed capital investment of P11,000,000 is required together with an estimated working capital of P2,500,000. Annual depreciation is estimated to be 10% of the fixed capital investment and annual profit is estimated to be P4,000,000. Based only on these given information, a. using the ROR method, what is the net annual profit of the project (in Php)? b. what is the rate of return of the proposed project (in %)? c. using the payback period method, what is the net annual cash flow of the project (in Php)?

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

See similar textbooks

Similar questions

An investment project has the following characteristics: Cost, P22,820; Annual cash inflows, P5,000; internal rate of return, 12%. What is the useful life of the project? A. 7 years B. 12 years C. 4.56 years. D. It is impossible to determine from the data given
am. 71.
A project with a life of 10 has an initial fixed asset investment of $25,620, an initial NWC investment of $2,440, and an annual OCF of −$39,040. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is the project's equivalent annual cost, or EAC? Show equations using excel.
Calculate the internal rate of return for project B
A P15M worth of fixed capital investment is required for a proposed powerplant, and an estimated P2.75M working capital. Annual depreciation is estimated to be 12% of the fixed capital investment. Determine the rate of return on the total investment and the payback period if the annual profit is P3.5M
For project A, the cash flow effect from the change in net working capital is expected to be $490.00 at time 2 and the level of net working capital is expected to be $750.00 at time 1. What is the level of current assets for project A expected to be at time 2 if the level of current liabilities for project A is expected to be $2,600.00 at time 2? $2,860.00 (plus or minus $10) $3,840.00 (plus or minus $10) $1,360.00 (plus or minus $10) $2,340.00 (plus or minus $10) None of the above is within $10 of the correct answer
A real-estate development firm, Peterson and Johnson, is considering five possible development projects. Using units of millions of dollars, the following table shows the estimated long-run profit (net present value) that each project would generate, as well as the amount of investment required to undertake the project. Project 1 Project 2 Project 3 Project 4 Project 5 Estimated profit ($million) 1 1.8 1.6 0.8 1.4 Capital Required for Project ($million) Capital Available ($million) Project 1 Project 2 Project 3 Project 4 Project 5 Capital 6 12 10 4 8 20 Click here for the Excel Data File The owners of the firm, Dave Peterson and Ron Johnson, have raised $20 million of investment capital for these projects. Dave and Ron now want to select the combination of projects that will maximize their total estimated long-run profit (net present value) without investing more than $20 million. Formulate and solve this model on a spreadsheet. Determine the combination of…
Explain how did it get the after-tax cash flow, NPV, EVA, and MVA
Find the net present value (NPV) for a proposed project costing $22,960. Assume that the appropriate cost of capital for projects of this risk level, at this company is 9.58%, and the estimated cash flows for the life of the project are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $6,920 $5,329 $6,451 $9,655 $12,368 $4,319
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $130,900. Project 2 requires an initial investment of $97,200. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 Years 1-7 Initial investment Net present value Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Net Cash Flows X Answer is complete but not entirely correct. Present Value of Annuity at 10% 26,460 X Project 1 $ 105,300 X 70,200…
The internal rate of return (IRR) of a certain project is 11 % and the capital investment is $400,000. What is the present worth of this project at MARR = 15 % ? Note : This is not an assignment question and not a graded question... Thank you
Project X had total revenues of Rs. 1,50,000 and total expenses of Rs. 75,000. The total riskweighted assets in the project are Rs. 4,50,000. RORAC (Return on Risk Adjusted Capital) for Project X is?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS