Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selectedinformation on the four projects follows:Life ofNettheInternalProject(years) of ReturnInvestmentPresentRateProjectRequired$970,000$730,000$670,000$830,000Value$176,514$175,933$185,782$129,082A6.16%В1115%C19%17%The net present values above have been computed using a 10% discount rate. The company wants your assistance in determiningwhich project to accept first, second, and so forth. Compute the project profitability index for each project. (Round your answers to 2 decimal places.)ProjectProject ProfitabilityIndexAВCDIn order of preference, rank the four projects in terms of net present value, project profitability index and internal rate ofreturn.Net PresentValueProjectProfitabilityIndexInternal Rateof ReturnFirst preferenceSecond preferenceThird preferenceFourth preference

profitability index higher the better. NPV higher the better. IRR higher the better.

Answered: Oxford Company has limited funds…

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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Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Investment Present Value of Cash Life of the Project Internal Rate Project Required A $ 200,000 Inflows $294,323 (years) of Return 7 16% B $ 137,000 $ 267,000 с $ 104,000 $225,035 D $ 167,000 $ 303,136 12 7 3 21% 20% 19% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Note: Round your answers to 2 decimal places. Project Profitability Index A B C D In order of preference,…
Verno Inc, is considering Projects L. However company has lost investment information for Project L. Payback period for the projects is 3 years. What is the IRR of the project L ? 01234 CFL -$X. $600. $620. $570. $520 A.11.1% B. 11.08% C. 11.35% D. 11.21% E. 10.95% (No chatgpt answer)
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%23 Compute the discounted payback statistic for ProjectCif the appropriate cost of capital is 7 percent and the maximum allowable discounted payback period is three yearss. (Do not round Intermedlate colculatlons ond round your final answer to 2 declmal places.) Project C 1. $1,840 3. $940 4. $580 2. 5. Cash flow: -%242,400 Discounted payback period years. Should the project be accepted or rejected? Vaccepted O rejected
Problem 14C-3 (Algo) Income Taxes and Net Present Value Analysis [LO14-8) Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. Lander estimated the following costs and revenues for the project: Cost of equipment needed Working capital needed Repair of the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 420,000 $ 79,000 $ 27,500 $ 540,000 $ 275,000 $ 118,000 The piece of equipment mentioned above has a useful life of five years and zero salvage value. Lander uses straight-line depreciati for financial reporting and tax purposes. The company's tax rate is 30% and its after-tax cost of capital is 10%. When the project concludes in five years, the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. 1. Income tax expense Year 1 Year…
Assume that a company is considering a $2,400,000 capital investment in a project that would earn net income for each of the next five years as follows: Sales Variable expenses Contribution margin $ 1,900,000 800,000 1,100,000 12:46 Fixed expenses: Out-of-pocket operating costs. $ 300,000 Depreciation 400,000 700,000 Net operating income $ 400,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 21%, then the project's net present value is closest to
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SHOW FULL WORKING OUT, USING FORMULAS, NO TABLES, CORRECT ANSWER IRR = 10.26% pa or 10.3% pa (for starting value consider i* = 10% ---> NPV(10%) = 3.2831 AND NPV(11%) = -9.4207
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Lesi PayUBLK Perou, el Presem velue Method, and Analysis Elite Apparel Inc. is considering two Investment projects. The estimated net cash flows from each project are as follows: Year Plant Expansion Retall Store Expansion 1 2 3 4 5 Total Year Each project requires an Investment of $241,000. A rate of 15% has been Present Value of $1 at Compound Interest 6% 10% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 1 2 3 4 5 6 7 8 9 10 Required: $133,000 108,000 94,000 85,000 26,000 $446,000 0.909 Net present value 0.826 0.751 15% 0.893 0.870 0.833 0.797 0.756 0.694 0.712 0.579 0.683 0.636 0.572 0.482 0.621 0.557 0.497 0.402 0.564 0.507 0.432 0.335 0.513 0.452 0.376 0.279 0.467 0.327 0.233 0.424 0.284 0.194 0.385 0.247 12% 0.404 0.361 0.322 2 years Present value of net cash flow total Less amount to be invested $111,000 130,000 89,000 62,000 54,000 $446,000 1a. Compute the cash payback period for each project. Cash Payback Period 2 years ✓ ✓ S api 0.658 S 20% Plant Expansion…
21 What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10%? g OD A $20,000.00 B. $21,356.95 С. $22,618.83 D. $25,237.66 O A OB ос

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