Jill Harrington, a manager at Jennings Company, is considering several potential capital investment projects. Data on these projectsfollow:Initial investmentAnnual cash inflowsPV of cash inflowsRequired:Project X$ 40,00025,00045,000Project Y$ 20,00010,00033,000Project Z$ 50,00025,40070,0001. Compute the payback period for each project and rank order them based on this criterion.2. Compute the NPV of each project and rank order them based on this criterion.3. Compute the profitability index of each project and rank order them based on this criterion.4. If Jennings has limited funds to invest, which ranking should Jill recommend?

1. Payback period = Initial investment/annual cash flowsParticular X Y Z Initial investments $40,000…

Answered: Jill Harrington, a manager at Jennings…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vishal
b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using PI.
Suppose a company has the following three projects and limits its capital budget to $50000. Projects Present Value of Cash Inflows Initial Investment A $40000 $25000 В 37500 25000 70000 50000 1. Calculate the projects' net present values (NPVS). 2. Calculate the projects' profitability indexes (PIs). 3. Which project(s) should the company choose? Why?
BATA plc. is considering the following two projects. Only one of which maybe selected. Each project has a required rate of return of 15% for A and 10% for B with the following cash flowsYear Project A Project B0 K (200,000) K (175,000)1 68,700 50,0002 44,500 60,2503 56,500 45,2504 35,500 80,250Required:A. Calculate for each project:Payback period for each of the projects, Net present value for each of the projects and Internal rate of return for each of the projectsB. Explain which project you would recommend for acceptance for each of the three methods and overall. C. Briefly discuss the relative merits of the pay back and net present value methods of evaluation methods mentioned in (a) above
You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 4.7%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 Project A Year 1 - -$51 $27 B - $101 $22 Year 2 $21 $42 Year 3 $20 Year 4 $13 $51 $59 - ☑
Use the following information to answer questions 5-7. You are evaluating two investment projects for your company. The cost of capital is 12%. The cash flows for each investment are given below Project A B 1-0 -200,000 - 100,000 El 58,256 44,526 1-2 58,256 44,526 1-3 58,256 44,526 1-4 58,256 0 t=5 58,256 0 Using the payback criterion and a cutoff payback period of 2.5 years, determine whether each project is acceptable.
Har
Can I please have the answers in these format : payback period = investement net annual inflow ARR = Average annual profit x 100 Average investment 1 can I have the answers in these type of format
Please solve in clear way
Financial Manager of Timmy Company is considering two projects (project A and project H), which have cash flows as follows: Year Cash Flow of Project A (in $) Cash Flow of Project H (in $) 0 -100 -100 1 10 70 2 60 50 3 80 20 Timmy Company’s cost of capital is 10 percent. Calculate payback, NPV, IRR, and MIRR for both projects. (Please have a step by step format to your answer with explainations. Thanks (=)
A company is considering three alternative Investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Complete this question by entering your answers in the tabs below. a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will It accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Required A Required B Compute the net present value of each project. Potential Projects Project A Present value of net cash flows Initial investment Net present value Required C Project E Project C $10,685 (10,000)

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