Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 9 percent. Further, the company has only $26 million to invest in new projects this year. Cash Flows (in millions) Year CDMA G4 Wi-Fi 0-$10-$16 -$26 1 2 3 a. CDMA a. G4 a. b. b. G4 b. a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) Wi-Fi CDMA 13 9.5 7.5 Wi-Fi 14 24 29 38 26 26
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 9 percent. Further, the company has only $26 million to invest in new projects this year. Cash Flows (in millions) Year CDMA G4 Wi-Fi 0-$10-$16 -$26 1 2 3 a. CDMA a. G4 a. b. b. G4 b. a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) Wi-Fi CDMA 13 9.5 7.5 Wi-Fi 14 24 29 38 26 26
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
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Transcribed Image Text:Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in
wireless technology. It is considering investments in three different technologies to
develop wireless communication devices. Consider the following cash flows of the three
independent projects available to the company. Assume the discount rate for all projects
is 9 percent. Further, the company has only $26 million to invest in new projects this
year.
Cash Flows (in millions)
Year CDMA G4
0
1
2
3
a. CDMA
a.
G4
Wi-Fi
-$10-$16 -$26
a.
b.
Calculate the profitability index for each investment. (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
Calculate the NPV for each investment. (Do not round intermediate calculations
and enter your answer in dollars, not millions of dollars, rounded to 2 decimal
places, e.g., 1,234,567.89)
a. Wi-Fi
b. CDMA
b. G4
b. Wi-Fi
13
9.5
7.5
14
24
29
38
26 26
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