HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / month/compounded quarterlyand 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives:ProjectHD131,000First ContMonthly contannual Income111.0006,300$4.0005.00089,0004,1004,20054,80053,600$1,900Income every years12.50013,10011,00010.200(a) PW for project A:Q.C.is every(b) PW comparison If they are Independent: TakeProjectFirst CostOC-IncomeIncome everyCompare toEquation: PWTake projectPW-HW-Chp-8-1-continued.:(b) PW comparison If they are mutually exclusive: Take onlyProjectFirst CastO.CIncomeIncome everyCompare toIncr.F.C.Inc.O.C.Incr. IncomeIncr.lac. everyEquation: PW-Take project HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / month/compounded quarterlyand 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives:ProjectHD131,000First ContMonthly contannual Income111.0006,300$4.0005.00089,0004,1004,20054,80053,600$1,900Income every years12.50013,10011,00010.200(a) PW for project A:Q.C.is every(b) PW comparison If they are Independent: TakeProjectFirst CostOC-IncomeIncome everyCompare toEquation: PWTake projectPW-HW-Chp-8-1-continued.:(b) PW comparison If they are mutually exclusive: Take onlyProjectFirst CastO.CIncomeIncome everyCompare toIncr.F.C.Inc.O.C.Incr. IncomeIncr.lac. everyEquation: PW-Take project

Capital budgeting is the process by which a corporation examines potential large projects or…

HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded quarterly and 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives: D A 111.000 6.300 First Cant Monthly c $1,000 $4000 5.000 131,000 4,200 4.100 54.800 $3,000 $1,900 Income every years 12.500 13,100 11,000 10.200 (a) PW for project A: E.C. Q.C (b) PW comparison If they are Independent: Take Project Find Cat Income every Compare to Equation: PW- Take project PW- HW-Chp-8-1-continued :(b) PW comparison If they are mutually exclusive: Take only Project First C O.C. Income every Compart Iner.F..C. Incr .O.C. Incr. Inc. every Equation: P Take project

HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded quarterly and 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives: D A 111.000 6.300 First Cant Monthly c $1,000 $4000 5.000 131,000 4,200 4.100 54.800 $3,000 $1,900 Income every years 12.500 13,100 11,000 10.200 (a) PW for project A: E.C. Q.C (b) PW comparison If they are Independent: Take Project Find Cat Income every Compare to Equation: PW- Take project PW- HW-Chp-8-1-continued :(b) PW comparison If they are mutually exclusive: Take only Project First C O.C. Income every Compart Iner.F..C. Incr .O.C. Incr. Inc. every Equation: P Take project

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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Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Revenues $66,973 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount.
1
21. NPV and Payback Period Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent. Ι Year Project F Project G 0 -$195,000 -$298,000 1 98,400 71,600 2345 86,300 94,500 81,600 123,600 72,000 166,800 64,800 187,200 a. Calculate the payback period for both projects. b. C. Calculate the NPV for both projects. Which project, if any, should the company accept?
For the following table, assume a MARR of 9% per year and a useful life for each alternative of six years that equals the study period the ior from least capital investment to greatest capital investment is Do nothing A C. B.Complete the IRR analysis by selecting the preferred Do nothing vs A A vs C A vs B Capital investment -$15,000 -%$2,000 -$3,000 O aB Annual Revenues $4,000 $900 $460 Annual costs -S1,000 Ob. Do nothing -S160 $100 Morket value $6.000 -%$2,200 $3,350 Occ RR 12.7% 10.9% OdA
ENGINEERING ECONOMY A construction project has an initial investment of BD 80,000 and returns BD 25,000 per annum, for 5 years. At a 12% MARR, is this a profitable investment? Use present worth method.
Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,100 $790 $810 $740 $520 $320 Payback: ? Years
out of question A company is considering a project that requires an initial cost of $8,000. The project will great dea net cash inflows of $100 in year one, $700 in year two, $6,000 in year three, $11,000 inyear four and $1 in year five. What is the NPV using 4% as the discount rate? NOTE: Enter amounts rounded to two decimals (e.g., 78.76 or 40.00) Net Cash Inflow Year 0 2 3 4 5 $100 $700 $6,000 $11,000 $12,000 NPV Total S $ $
Investment cost twenty thousand dollars, annual income (gain) 8000 dollars / year, duration 5 years; salvage value 3000 dollars, annual expenses (maintenance and operating expenses) 4000 dollars / year, the profit rate that the company can be accepted is 15%. Evaluate the investment according to the net future value method.
2
Select the best alternative among the following altenatives using rate of return analysis MARR is 12% per year. C. 260,000 310,000 390,000 30,000 100,000 150,000 180,000 B. First cost, S Annual disbursement, S 65,000 Salvage value, S Life, year 40,000 10 10 15
G.3. A proposed geothermal energy project has an initial cost of $1,000K. In addition it will re- quire an infinite series of periodic maintenance expenditures at five-year intervals following the first maintenance expenditure at EOY 2. Find the equivalent annual cost with n oo and i = 88 percent per year. EOY Expenditure Initial cost $1,000K Periodic maintenance 140K Same 200K Same 260K 17 Same 320K etc. to oo etc, to oo (Ans. NAW = $137,510K/yr) %3D O2725
A company manager is faced with an investment proposal of Rp. 100,000,000, - with a period of 4 years and cash inflows every year as follows: Year 1 Rp. 40,000,000 Year 2 Rp. 30,000,000 Year 3 Rp. 30,000,000 Year 4 Rp. 20,000,000 Requested: a. With an interest rate of 12%, with the NPV and PI method, assist the manager in making decisions. Whether the project is accepted or rejected. b. If it is known that the second interest rate is 20% and the cost of capital offered is 17%, calculate the IRR, and make a decision whether to accept or reject the project.

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