Question 1The following information for particular project: using the S.A (Sensitive Analysis) to show isthe project acceptable economically or not?Sales Quantity725 Thousands unitsPrice for Sales Quantity$11Cost for Quantity$9.5Project life span (virtual)7 yearsinvestment costs1330Thousands $Well-Noticed that average cost of capital (i= 9 %).The required:The test of the project net present value under the following situations:A) current situation,B) under the economic changes: Reduced selling price per unit (10%). & (15%) increase in sales& 5% decrease in the cost of the unit produced.

NPV is the one of the technique in capital budgeting concept which help in decision making whether…

Answered: Question 1 The following information…

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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Question Compute the IRR statistic for Project A and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 %. Time 1 2 3 4 5 Cash Flow ($92,000$42.999 $45,668 $38,554 $36,778 $47,000 O The project's IRR is 36.3 % and the project should be accepted. O The project's IRR is 65.5 % and the project should be accepted. O The project's IRR is 23.9 % and the project should be rejected.. O The project's IRR is 43.2 % and the project should be accepted.
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Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Project A Project Z $80,000 $64,000 4 years 9 years 0 0 $6,400 $20,160 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A Project Z Feedback Check My Work X % X %
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You are evaluating two mutually exclusive projects. Period Project X Project Y 0 - $5,000 - $4,000 1 $ 3,250 $3,250 2 $3,250 $2,000 IRR 19.43 % 22.17% If your firm has a cost of capital of 10%, which project should you select? Group of answer choices Project X Project Y Insufficient information to provide an answer
Refer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
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Problem: Project Expected Net Standard Deviation Present Value A $50,000 $20,000 В 10,000 7,000 Questions: 1. Using the standard deviation criterion, which project is riskier? 2. Using the project is riskier? coefficient of variation criterion, which
Valuation Problem Calculate NPV and IRR for the following investment. Initial investment = $1,000,000 machine, the project term is 6 years, ncf yr 1 = 387,160 ncf yr 2 = 459,460 ncf yr 3 = 465,322 ncf yr 4 = 481,725 ncf yr 5 = 506,617 ncf yr 6 = 269.200 and the discount rate is 12%.
Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment 1 2 Project A Project B 12000 4150 Project C 12000 12000 5225 8250 1200 3100 3800 4600 Assume a discount Rate of 5.45 % 5260 7360 9460 9275 9300 4 Use the information above and help the management in choosing the most desirable Project using Payback period, Discounted payback Net Present value and Profitability Index. Out of the four methods which is considered to be the most desirable. Explain
1. What is the project’s net present value? 2. What is the project’s internal rate of return to the nearest whole percent? 3. What is the project’s simple rate of return?

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