Information on four investment proposals is given below:Investment requiredPresent value of cash inflowsNet present valueLife of the projectRequired:1. Compute the project profitability index for each investment proposal. (Round your answers to 2 dec2. Rank the proposals in terms of preference.Propoza!ABCDCOLONINSTIndex$(60,000) $(130,000) $(140,000) $(2,100,000)86,600 181,100 213,900 2,803, 200703,200$ 26,600 $ 51,100 $ 73,900 $5 years7 years6 years6 yearsKanaPreferenceQ Searchk< PrevD4 of 7SUSNTHE

Profitability index refers to the method of capital budgeting used for measuring the attractiveness…

Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project $(60,000) $(130,000) $(140,000) $(2,100,000) 86,600 181,100 213,900 2,803,200 703,200 6 years $ 26,600 $ 51,100 $ 73,900 $ 5 years 7 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2. Rank the proposals in terms of preference.

Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project $(60,000) $(130,000) $(140,000) $(2,100,000) 86,600 181,100 213,900 2,803,200 703,200 6 years $ 26,600 $ 51,100 $ 73,900 $ 5 years 7 years 6 years Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2. Rank the proposals in terms of preference.

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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Two projects have the following projected cash flows: Project A Project B Year Cash Flow Cash Flow 0 -$105,000 -$150,000 1 $30,000 $30,000 2 $45,000 $30,000 3 $30,000 $40,000 4 $15,000 $50,000 5 $44,500 $87,000 Both projects have a salvage value at the end of year 5 of $20,000 Calculate the NPVs and IRRS of each project, if the WACC is 6% and if it is 11%. Then answer the questions that follow. You may find it useful to enter your answers in the following table: NPV IRR Project A Project B Project A Project B @6% WACC @ 6% WACC @11% WACC @11% WACC Screenshot 2024-04-... i Q Q く NPV & IRR Refer to the NPV & IRR Scenario above. What is the Future Value of Project A if the WACC is 11%? 48,267 ○ $64,349 $103,818 ○ $71,701 $97,323
Compute the payback statistic for Project A if the appropriate cost of capital is 7 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: –$1,700 $630 $690 $660 $440 $240 Should the project be accepted or rejected? multiple choice accepted rejected
i
(A) Sunny Company is investigating four different opportunities. Information on the four projects under study is as follows: Project 1 2 34 Investment required $480,000 $360,000 $270,000 $450,000 Present value of cash inflows 567,270 433,400 336, 140 522,970 Net present value $87,270 $73, 400 $66, 140 $72,970 Life of project 6 years 12 years 6 years 3 years The company's required rate of return is 10%; therefore a 10% discount rate has been used in the present value computations above. Limited funds are available for investment, so the company cannot accept all of the available projects. Required: a) Compute the profitability index for each investment project. b) Rank the four projects according to preference, in terms of: (i) Net present value, (ii) Profitability index. (B) Snow Company is considering the purchase of a new piece of equipment for laying sod. Relevant information concerning the equipment follows: Cost of Equipment $ 180,000.00 Annual Cost saving from new equipement $37,…
You are given the following financial information related to a capital investment project. What is the project's Year 1 Net Cash Flow? Sales revenues Depreciation Other operating costs Interest Exp Tax rate WACC Select one: a. $8,580 b. $8,900 c. $9,350 d. $9,463 e. $9,832 $22,250 $8,000 $12,000 $800 40.0% 12.0%
If the cost of a project is $50,000 and the cash inflows are as given in the table below, what is the payback period for the project? Year CF $12,000 $15,000 3 $18,000 4 S20,000 $25,000 3.0 years O 2.75 years (3.25 years 4.5 years 4.0 years
Given the data in the following table, what is the IRR of Project B?
All information is provided
The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project A Project B Project C Initial Cost 240,000.00 260,000.00 200,000.00 Expected life 5 5 4 Scrap value expected 10,000.00 15,000.00 10,000.00 Expected Cash Inflows: End Year 1 85,000.00 95,000.00 45,000.00 End Year 2 70,000.00 70,000.00 65,000.00 End Year 3 65,000.00 55,000.00 95,000.00 End Year 4 60,000.00 50,000.00 100,000.00 End Year 5 50,000.00 50,000.00 The company estimates cost of capital is 18%. The table below shows the present value of $1 at 14%, 18% and 22%. Periods 14% 18% 22% 1 0.877 0.847 0.820 2 0.769 0.718 0.672 3 0.675 0.609 0.551 4 0.592 0.516 0.451 5 0.519 0.437 0.370 6 0.456 0.370 0.303 Required: Calculate:(b) The accounting rate of return for each…
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Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (330,000) $ (40,000) $ (190,000) $ (2,380,000) Present value of cash inflows 480,000 56,500 286,700 3,178,500 Net present value $ 150,000 $ 16,500 $ 96,700 $ 798,500 Life of the project 5 years 7 years 6 years 6 years Required: 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference.
Compute the payback statistic for Project A if the appropriate cost of capital is 7 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: −$1,400 $510 $600 $600 $380 $180 Payback years: _______.__

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