Question Four Two plants (A) and (B) are suggested to be constructed. Plant (A) with an investment of 105,000$, and Plant (B) with an investment of 25,000 $. End of year 0 1234 Plant (A) (103) Plant (B) (103) 105 25 35 10 35 10 35 10 35 10 35 10 5 a. The net present value at rate of 20 % (2 marks) b. The discounted cash flow rate of return (initial guess 20%). c. Which project you will select and justify your selection.

Question Four Two plants (A) and (B) are suggested to be constructed. Plant (A) with an investment of 105,000$, and Plant (B) with an investment of 25,000 $. End of year 0 1234 Plant (A) (103) Plant (B) (103) 105 25 35 10 35 10 35 10 35 10 35 10 5 a. The net present value at rate of 20 % (2 marks) b. The discounted cash flow rate of return (initial guess 20%). c. Which project you will select and justify your selection.

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 14 You have a total of $30,000 to invest in a project and are considering the following three projects: Cash Flows Project A ($30,000) $8,500 Year Project B ($30,000) $19,600 Project C ($30,000) $10,400 1 $9,300 $17,300 $4,500 $10,400 $10,400 3. $10,400 4. $11,200 $4,200 $10,400 $12,300 $2,300 $10,400 If the cost of capital (discount rate) is 10%, which project(s) do you invest in and why? A. Project B- it will pay back the quickest OB. Project C- it generates the greatest cash flow C. Project A-it has the highest accounting rate of return D.Project B-it has the highest net present value E. Project A- it has the highest net present value OF. Project C- it has the highest profitability index
Problem 5-3 Calculating Discounted Payback An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, for the next four years, respectively. The discount rate is 14 percent. a. What is the discounted payback period for these cash flows if the initial cost is $6,200? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $8,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period for these cash flows if the initial cost is $11,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Discounted payback period b. Discounted payback period c. Discounted payback period years years years
Sh 14 Please help me Thankyou.
Problem 8-8 Payback (LO4) The following are the cash flows of two projects: Year Project A $ (380) Project B $ (380) 0 210 280 210 280 210 280 210 1234 4 What is the payback period of each project? Note: Round your answers to 1 decimal place. Project A B Payback Period years years
QUESTION 6 Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow $950 1,050 1,320 1,200 1 2 3 4 If the discount rate is 10 percent, what is the present value of these cash flows? 3542.76 3578.84 3418.66 4470.00 3847.03 Click Save and Submit to save and submit. Click Save All Answers to save all answers. SEP 28 30 tv ♫ A
Question 5 Bunnings Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below. Equipment 1 Equipment 2 Cost $186,000 $195,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 86 000 93 000 83 000 75 000 55 000 97 000 84 000 86 000 75 000 63 000 Required: Identify which option of equipment should the company accept based on Profitability Index? Identify which option of equipment should the company accept based on discounted pay back method if the payback criterion is maximum 2 years?
out of question A company is considering a project that requires an initial cost of $8,000. The project will great dea net cash inflows of $100 in year one, $700 in year two, $6,000 in year three, $11,000 inyear four and $1 in year five. What is the NPV using 4% as the discount rate? NOTE: Enter amounts rounded to two decimals (e.g., 78.76 or 40.00) Net Cash Inflow Year 0 2 3 4 5 $100 $700 $6,000 $11,000 $12,000 NPV Total S $ $
ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
ces Year 0 1 Cash Flow (A) -$430,000 41,500 2 64,500 3 81,500 4 545,000 Cash Flow (B). -$ 42,500 20,900 12,800 21,100 17,900 The required return on these investments is 10 percent. a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. d. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. e. Based on your answers in (a) through (d), which project will you finally choose? a. Project A Project B b. Project A Project B years years Q Search < Prev 5 of 5 Next L
Answer all the questions QUESTION 1 Questions a. After-tax cash flows for two mutually exclusive projects (with economic lives of four years each) are: Y Year Project X Project K(12,000) 5,000 01234 5,000 5,000 5,000 i. ii. iii. K(12,000) 0 0 0 25,000 The company's cost of capital is 10 percent. Compute the following: The internal rate of return for each project. The net present value for each project. Which project should be selected? Why? b. A firm is considering the purchase of an automatic machine for K6,200. The machine has an installation cost of K800 and zero salvage value at the end of its expected life of five years. Depreciation is by the straight-line method with the half-year convention. The machine is considered a five-year property. Expected cash savings before tax is K1,800 per year over the five years. The firm is in the 40 percent tax bracket. The firm has determined the cost of capital (or minimum required rate of return) as 10 percent after taxes. Should the firm…
Year 0123 Cash Flow -$ 27,000 11,000 14,000 10,000 The appropriate discount rate is 16 percent. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % Should the firm accept the project? O Reject O Accept
Problem 10.18 Timeline Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $870,772, and project B's cost is $1,260,423. Cash flows from both projects are given in the following table. Year Project A Project B $86,212 $586,212 313,562 427,594 285,552 1 2 413,277 231,199 3 4 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback periods of project A Discounted payback periods of project B Which will be accepted with a discount rate of 8 percent? Timeline should choose Click if you would like neither project or this question: Open Show Work Project A Project B Both projects LINK TΟ ΤΕXT

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