PROGRAMSSELF DEVELOPMENTE-LIBRARY8.6.1011 1213141516Your company wants to invest JD 10,000,000 in network, taking into consideration the below tableInvestment10,000,000.00LifetimeAnnual Revenues in Yearl2,000,000.002%Annual decline in revenues from Y230%Direct Cost % of revenues15%OPEX % of revenues7%Interest Discount rate/fWACC)CO GRAMSYSELF DEVELOPMENTE-LIBRARYZAIN H.in your opinion, would you advise your company to go forward with this investment and why ?1.

Net present value, a tool of Capital budgeting helps in analyzing a project or investment’s…

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in your opinion, would you advise your company to go forward with this investment and why ?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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Question

PROGRAMS
SELF DEVELOPMENT
E-LIBRARY
8.
6.
10
11 12
13
14
15
16
Your company wants to invest JD 10,000,000 in network, taking into consideration the below table
Investment
10,000,000.00
Lifetime
Annual Revenues in Yearl
2,000,000.00
2%
Annual decline in revenues from Y2
30%
Direct Cost % of revenues
15%
OPEX % of revenues
7%
Interest Discount rate/fWACC)
CO

GRAMS
Y
SELF DEVELOPMENT
E-LIBRARY
ZAIN H.
in your opinion, would you advise your company to go forward with this investment and why ?
1.

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n Ltd is considerinc X O VitalSource Bookshelf: Manageria X G Marian Ltd is considering two mu X ses/1155/quizzes/6003/take - LIBIS - Sampoerna... Dashboard A VitalSource Booksh... O Spotify - Web Player MLA For Show your computation Scooby Doo Ltd is considering two mutually-exclusive projects with the following details: Project A Initial investment is $450,000 Scrap value in year 5 is $20,000 Year: 1 3 4 5 Annual cash flows 200 150 150 55 100 ($000) Project B Initial investment $100,000 Scrap value in year 5 is $10,000 Year: 1 2 3 4 Annual cash flows ($000) 20 20 30 40 40 33%
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Consider the following investment project: n An I0 -$8,500 9%1 $4,400 12%2 $4,400 10%3 $1,500 13%4 $3,500 12%5 $4,300 10%Suppose, as shown in the preceding table, that the company's reinvestment opportunities (that is, its MARR) change over the life of the project. For example, the company can invest funds available now at 9% for the first year, 12% for the second year, and so forth. Calculate the net present worth of this investment, and determine its acceptability.
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NPV profiles WACC (Dollars in Millions) Plan A Plan B Project NPV Calculations: NPVA NPVB Project IRR Calculations: IRRA IRRB NPV Profiles: Discount Rates 0% 5% 10% 15% 20% 22% 25% 11.00% NPVA $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 -$40.00 Formulas #N/A #N/A -$11.00 $2.47 $2.47 $2.47 #N/A #N/A NPVB 1 $6.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 3 $6.39 $6.39 4 $6.39 $2.47 5 6 7 $6.39 $6.39 $6.39 $2.47 $2.47 8 9 $6.39 $6.39 $2.47 $2.47 $2.47 10 $6.39 $2.47 11 $6.39 12 $6.39 13 $6.39 $2.47 $2.47 $2.47 14 $6.39 15 $6.39 $2.47 $2.47 16 $6.39 $6.39 $2.47 17 39 $2.47
2 Calculate the NPV in all of the following cash flow projections shown in Ala through G13 based on a required rate of 10.50/0 NPV calculation: PV=CF/(1+r)^n 20 0 T year 23 4 cash Flow 4.120,000 35,000 47,500 55,000 62,000 1 Is this a good project for the business to accept? Explain dratchimphi & tant Labe Richie 70
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