From the following information calculate the Net Present Value of the two projects & suggestwhich of the two projects should be accepted assuming a discount rate of 10 %.Project YRs. 30,000Project XInitial InvestmentEstimated LifeRs. 20,0005 years5 yearsScrap ValueRs. 1,000Rs. 2,000The profits before Depreciation and after Taxes (Cash flows) are as follows:Project XRs. 5,000Project YYear IRs. 20,000Year 2Rs. 10,000Rs. 10,000Rs. 5,000Rs. 3,000Rs. 2,000Year 3Rs. 10,000Year 4Rs. 3.000Year 5Rs, 2,000

Capital budgeting is a process of investing funds into long terms projects that provide benefits in…

From the following information calculate the Net Present Value of the two projects & sugge which of the two projects should be accepted assuming a discount rate of 10%. Project Y Rs. 30,000 5 years Rs. 2,000 Project X Initial Investment Rs. 20,000 Estimated Life 5 years Scrap Value Rs. 1,000 The profits before Depreciation and after Taxes (Cash flows) are as follows: Project Y Rs. 20,000 Rs. 10,000 Rs. 5,000 Rs. 3,000 Rs, 2,000 Project X Rs. 5,000 Year I Year 2 Rs. 10,000 Rs. 10,000 Rs. 3.000 Year 3 Year 4 Year 5 Rs, 2,000

From the following information calculate the Net Present Value of the two projects & sugge which of the two projects should be accepted assuming a discount rate of 10%. Project Y Rs. 30,000 5 years Rs. 2,000 Project X Initial Investment Rs. 20,000 Estimated Life 5 years Scrap Value Rs. 1,000 The profits before Depreciation and after Taxes (Cash flows) are as follows: Project Y Rs. 20,000 Rs. 10,000 Rs. 5,000 Rs. 3,000 Rs, 2,000 Project X Rs. 5,000 Year I Year 2 Rs. 10,000 Rs. 10,000 Rs. 3.000 Year 3 Year 4 Year 5 Rs, 2,000

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

From the following information calculate the Net Present Value of the two projects & suggest
which of the two projects should be accepted assuming a discount rate of 10 %.
Project Y
Rs. 30,000
Project X
Initial Investment
Estimated Life
Rs. 20,000
5 years
5 years
Scrap Value
Rs. 1,000
Rs. 2,000
The profits before Depreciation and after Taxes (Cash flows) are as follows:
Project X
Rs. 5,000
Project Y
Year I
Rs. 20,000
Year 2
Rs. 10,000
Rs. 10,000
Rs. 5,000
Rs. 3,000
Rs. 2,000
Year 3
Rs. 10,000
Year 4
Rs. 3.000
Year 5
Rs, 2,000

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The following information regarding an investment project is available. Discount rate 7% Year Cash Flow 0 (£125,000) 1 £60,000 2 £50,000 3 £10,000 4 £10,000 5 £50,000 A). What is the Net Present Value of the Project? Choose one from the following: A. £56,076 B. £43,670 C. £125,000 D. £26,188
You are given the following information about the cash flows for Projects A and B: Project B $12,643.00 $6,264.00 $5.119.00 $4,284.00 $3,265.00 $2,884.00 Year 0 1 2 3 4 5 Given this information, and assuming a risk-adjusted discount rate of 14.0 percent for both projects, determine the internal rate of return (IRR) for the project with the highest net present value (NPV). 26.0818% 25.6301% 25.1784% Project A -$10,356.00 $2,185.00 $4,294.00 $4,642.00 $6,360.00 $3,125.00 O24.2750%
Newland Company is considering investing in one of two projects – A or B. The initial cost and net cash inflows from each project are shown below. The discount rate for both projects is 18% per cent. Cash Flow Project A Project B $ $ Initial Cost 3,000,000 3,500,000 Net Cash Inflows Year 1 800,000 1,000,000 Year 2 800,000 1,000,000 Year 3 1,200,000 700,000 Year 4 1,200,000 800,000 Year 5 1,200,000 800,000 Year Factor 1 0.8475 2 0.7182 3 0.6086 4 0.5158 5 0.4371 Discount factors for the projects @18% per annum are as follows: Required: Calculate the payback period for each project and identify the project in which the company should invest, giving ONE reason for your choice. Calculate the Accounting Rate of Return on initial capital for each project
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Consider the following two mutually exclusive projects: Year Cash Flow(A) -$ 63,000 39,000 33,000 22,500 14,600 Cash Flow(B) -$ 63,000 25,700 29,700 35,000 24,700 4 1-What is the IRR for each project? Project A Project B % % 2.IF you apply the IRR decision rule, which project should ti 3.Assume the required return is 14 percent. What is the NP Project A Project B 0123
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $53,000 1 $ 21,000 2 $ 21,000 3 $ 21,000 NPV = Payback = Discounted Payback =
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $63,000 $ 21,000 $ 21,000 $ 21,000 $ 21,000 Payback = Discounted Payback =
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