MCL is an Oman based company and engaging in hospitality industry, across the Sultanate. BDM is responsible to take decisions under the capital rationing circumstances. MCL has the following equipment to be purchased for the next budged period: Project Initial Investment NPV CF 1350000 250000 BG 750000 140000 BD 550000 190000 UB 550000 80000 a) Rank the projects based on the Profitability Index and make recommendations on initial findings. Calculate the total initial capital required for the above combination (addition of initial investments) and assume always your higher management will approve you 20% less than the required capital.

MCL is an Oman based company and engaging in hospitality industry, across the Sultanate. BDM is responsible to take decisions under the capital rationing circumstances. MCL has the following equipment to be purchased for the next budged period: Project Initial Investment NPV CF 1350000 250000 BG 750000 140000 BD 550000 190000 UB 550000 80000 a) Rank the projects based on the Profitability Index and make recommendations on initial findings. Calculate the total initial capital required for the above combination (addition of initial investments) and assume always your higher management will approve you 20% less than the required capital.

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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A firm by the name “Modern Nursing Care” is considering two projects for investment in biomedical plant. Based on the payback period method suggest which is a better investment choice.Project –A-Initial investment- 200000$, Cash inflows- 500000$ per year, life of project 8 years.Project-B-Initial investment-250000$, Cash inflows-25000$ per year, life of project 12 years.
The Board of Directors of Fizzer Co. recently approved the allocation of up to Php60 million of capital to be invested in a vaccine manufacturing facility to address the immediate need for COVID-19 immunization. As of today, the management of Fizzer Co. is assessing the best place to establish its vaccine manufacturing facility in which Philippines, India and Mexico are currently being considered by the management. General background COVID-19 is expected to last for a period of five-years from the time that vaccines are available and require highly specialized machines with no other use or resale value after the end of its useful life Philippines (30% tax rate) Fizzer have an existing facility in the Philippines which will require significant modifications for it to meet the rigorous safety requirements for the production of COVID-19 vaccines such that: Renovation costs is expected to be at Php10 million New machineries amounting to Php50 million will need to be imported from China…
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The Board of Directors of Fizzer Co. recently approved the allocation of up to Php60 million of capital to be invested in a vaccine manufacturing facility to address the immediate need for COVID-19 immunization. As of today, the management of Fizzer Co. is assessing the best place to establish its vaccine manufacturing facility in which Philippines, India and Mexico are currently being considered by the management. General background COVID-19 is expected to last for a period of five-years from the time that vaccines are available and require highly specialized machines with no other use or resale value after the end of its useful life Philippines (30% tax rate) Fizzer have an existing facility in the Philippines which will require significant modifications for it to meet the rigorous safety requirements for the production of COVID-19 vaccines such that: Renovation costs is expected to be at Php10 million New machineries amounting to Php50 million will need to be imported from China…

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