If a company has a business development plan for 8 years, it makes an initial capital investmentof IDR 300,000,000 with MARR = 10%.Year12345678Income85,260,00096,740,000135,250,000109,320,000148,610,000125,250,00098,750,00075,350,000Cost36,210,00038,450,00052,278,00048,570,00075,950,00065,430,00055,450,00049,250,000a) Calculate the NPV?b) Calculate the Payment Period with the same data?Net Cash Flow49,050,00058,290,00082,972,00060,750,00072,660,00059,820,00043,300,00026,100,000

Answered: If a company has a business development…

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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Garcia Company is considering a $380,000 investment with the following net cash flows. Garcia requires a 10% return on its investments. The net present value of this investment is: Annual Net Cash Present Value of $1 Flows at 10% Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Multiple Choice $190,413. $374,823. 3 $ 140,000 100, 000 160, 000 270,000 90,000 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209
Economics
What is the future value of $10,000 per year for 10 years invested at 10%? $159,374 $138,824 $170,000 $189,374
Task 1: The firm has provided the following financial data: Cost of equity is 13.5%. Net income is €2,500. The firm is considering the following investment projects: Size of project IRR of project €1,000 12.0% €1,200 €1,200 €1,200 €1,000 ● ● Project A B C D E Target capital structure is 50% debt and 50% equity. After-tax cost of debt is 8%. 11.5% 11.0% 10.5% 10.0% 1) Determine the firm's weighted average cost of capital. 2) Identify the project(s) that the firm should accept. 3) Identify the total capital budget. 4) If the firm follows a residual dividend policy, determine its payout ratio.
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.
Use the values in Table A-1 to complete table A-2(show formula too)
Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Thereafter Revenues $ 40,000 30,000 20,000 5,000 0 Expenses are expected to be 40% 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 $49,000 in plant and equipment. Required: a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? c. If the opportunity cost of capital is 10%, what is project NPV? d. What is project IRR?
13. An investment requires working capital equal to 15% of the year’s sales revenue to be in place at the start of the relevant year. The sales revenue for the three year project is forecast as £80,000, £100,000 and £90,000. What is the cashflow relating to working capital at time 2? A £1,500 outflow B £3,000 outflow C £1,500 inflow D £3,000 inflow
2. Calculating Project NPV The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,800 450 Year 1 Year 2 Year 3 Year 4 $14,200 2,100 8,200 175 $15,900 $15,700 2,100 2,100 8,200 8,200 250 275 $12,900 2,100 8,200 ? a. Compute the incremental net income of the investment for each year. b. Compute the incremental cash flows of the investment for each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
What is the MIRR for the project using a 12% Cost of Capital? Show in a timeline format. Year Cash Flow in $ 0 ($1000) 1 400 2 400 3 600
Net cost of investment is 100,000. Profitability index is 1.3 while cost of capital is 10%. Useful life is 10 years. Use up to two decimal places for the PVF. What is the ARR? A• 42.35% B• 21.17% C• 22.34% D• 30%
Determine the modified B/C ratio for the following information at 8% interest per year. Cost Component Initial Investment M & O cost Benefits Disbenefits 0.55 1.15 1.80 4.65 Estimated cost $16,000 $1,000 years 1-5 $1,500 years 6-10 $8,000 per year $2,500 per year

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