Growth Co has two divisions, Northern and Southern. The divisions are allowed to make their own investment decisions and they are currently considering the following separate projects:Capital requiredAdditional sales due to projectOperating profit marginCurrent return on investmentNeither Northern nor SouthernNorthern Southern$42.5m$60.2m$19.6m$28.5m42%21%If the projects are evaluated on the basis of return on investment (ROI), which division(s) would choose to go ahead with their investment(s)?O Both Northern and SouthernNorthern onlyO Southern only35%15%

Return on investment is ( profit/ cost of investment) *100. The project which will give higher…

Growth Co has two divisions, Northern and Southern. The divisions are allowed to make their own investment decisions and they are currently considering the following separate projects: Northern Southern $42.5m $60.2m. $19.6m $28.5m Capital required Additional sales due to project Operating profit margin Current return on investment f the projects are evaluated on the basis of return on investment (ROI), which division(s) would choose to go ahead with their investment(s)? Both Northern and Southern ONeither Northern nor Southern O Northern only Southern only 35% 15% 42% 21%

Growth Co has two divisions, Northern and Southern. The divisions are allowed to make their own investment decisions and they are currently considering the following separate projects: Northern Southern $42.5m $60.2m. $19.6m $28.5m Capital required Additional sales due to project Operating profit margin Current return on investment f the projects are evaluated on the basis of return on investment (ROI), which division(s) would choose to go ahead with their investment(s)? Both Northern and Southern ONeither Northern nor Southern O Northern only Southern only 35% 15% 42% 21%

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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Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $155,000 and has an IRR equal to 9 percent, and Project L costs $145,000 and has an IRR equal to 8 percent. OTC's capital structure consists of 20 percent debt and 80 percent common equity, and its component costs of capital are rdT = 4%, rs = 10%, and re = 13.5%. If OTC expects to generate $230,000 in retained earnings this year, which project(s) should be purchased? Round your answers to one decimal place. Project S -> WACC ______ % -> Acceptable? Yes / No Project L -> WACC ______ % -> Acceptable? Yes / No Thus, (ONLY PROJECT S, ONLY PROJECT L, BOTH PROJECTS, NEITHER PROJECT) should be purchased.
Walsh Company is considering three independent projects, each of which requires a $5 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here: Project H (high risk): Project M (medium risk): Cost of capital = 15% Cost of capital = 13% Project L (low risk): Cost of capital = 7% IRR = 8% Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure calls for 35% debt and 65% common equity, and it expects to have net income of $11,329,500. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to two decimal places. % IRR = 22% IRR = 12%
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
a) Calculate the payback for both the Edinburgh and Newcastle upon Tynecontracts. b) Critically evaluate the payback technique c) Advise Flyers plc’s senior executive team on the comments made by ChangYing Simmonds and Travis van Riemsdyk. Your advice should include anexplanation of the characteristics of investment appraisal decisions and theadvantages and disadvantages of the IRR.
Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. QUESTION) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest inone of them. You are given the following projected data:Project A Project BInitial cost R300 000 R300 000Scrap value R40 000 0Depreciation per year R52 000 R60 000Net profitYear 1 R20 000Year 2 R30 000Year 3 R50 000Year 4 R60 000Year 5 R10 000Net cash flowsYear 1 R90 000Year 2 R90 000Year 3 R90 000Year 4 R90 000Year 5 R90 000 Additional informationThe discount rate used by the company is 12%. Transcribed Image Text:Number of Periods 1 2 3 4 5 6 7 8 m 10 11 12 13 14 15 1% 2% 0.9901 0.9804 0.9709 3% 3.9020 3.8077…

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