Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Suggest the best technology which is to be implemented based on the future worth method of comparison assuming 20% interest rate, compounded annually. Initial Annual Life Investment Revenue (years) (Php) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 10 Technology Z 1,800,000 500,000 10 a. Technology X since it has the highest revenue. O b. Technology X since it is the least costly. O c. Technology Z since it has the highest revenue. O d. Technology Y since it has the highest revenue.

Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Suggest the best technology which is to be implemented based on the future worth method of comparison assuming 20% interest rate, compounded annually. Initial Annual Life Investment Revenue (years) (Php) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 10 Technology Z 1,800,000 500,000 10 a. Technology X since it has the highest revenue. O b. Technology X since it is the least costly. O c. Technology Z since it has the highest revenue. O d. Technology Y since it has the highest revenue.

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

See similar textbooks

Related questions

Q: Sunland Company is considering three long-term capital investment proposals. Each investment has a…

A: The objective of the question is to evaluate the three long-term capital investment proposals of…

Q: Aria Acoustics, Incorporated (AA). projects unit sales for a new seven-octave voice emulation…

A: Net present value refers to the capital budgeting metrics measuring the profitability of the…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: Cash flow refers to the movement of money into or out of a business or financial system, typically…

Q: Compute the (a) net present value, (b) internal rate of return (IRR), (c) modified internal rate of…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: An investment product promises to pay $43,000 at the end of 8 years. If an investor feels this…

A: The future value formula:Future value = Investment ( 1+ r) nGiven,future value = $43000r is the…

Q: A pharmaceutical company developed four investment plans. The initial investment and the…

A: a) Computation:

Q: NPV Calculate the net present value (NPV) for a 15-year project with an initial investment of…

A: In this question, we are required to determine the Net Present Value (NPV).

Q: calculate the minimum payback period - calculate the NVP of the projected cash flow - calculate the…

A: The PP is used to measure the time it takes for a project’s cash flows to recoup its initial…

Q: The internal rate of return is%. (Round to the nearest tenth as needed.)

A: Internal rate of return which is average expected rate of return over the period of the project life…

Q: A pharmaceutical company developed four investment plans. The initial investment and the…

A: d) Computation:

Q: Logan Company is considering two projects, A and B. The following information has been gathered on…

A: Solution:- Profitability Index measures the ratio of Present value of future cash flows to the…

Q: A utility company is considering the following plans to provide certain service required by the…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: Information for two alternative projects involving machinery investments follows. Project 1 requires…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: Information for two alternative projects involving machinery investments follows. Project 1 requires…

A: Net present value is a metric that evaluates the profitability of any cash-generating project by…

Q: Sheridan Company is considering three long-term capital investment proposals. Each investment has a…

A: Payback period:The payback period in finance signifies the duration it takes for an investment to…

Q: For the past year, Kayla, Inc., has sales of $45,407, interest expense of $3,464, cost of goods sold…

A: operating cash flow refers to the cash flow generated from the business operation.operating cash…

Q: PT ABC has data for the project of establishing a factory as follows : -Value of initial investment…

A: The capital budgeting is a phenomenon to evaluate the profitability of various alternative projects.…

Q: ZLX is evaluating an investment and has generated the following: Initial investment at time t=0 is…

A: IRR is a techniques under Capital budgeting which help in decision making by calculating the return…

Q: Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these…

A: Net Present Value (NPV) is a financial metric that calculates the difference between the present…

Q: Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these…

A: Project BCash Flow for Year 0 = cf0 = -15,000,000Cash Flow for Year 1 = cf1 = 6,000,000Cash Flow for…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Robust Ventures is planning to expand its production operation. It has identified three
different technologies for meeting the goal. The initial investment and annual revenues
with respect to each of the technologies are summarized in table below. Suggest the
best technology which is to be implemented based on the future worth method of
comparison assuming 20% interest rate, compounded annually.
Annual
Revenue
(Php)
Initial
Life
Investment
(years)
(Php)
Technology X
1,200,000
400,000
10
Technology Y
2,000,000
600,000
10
Technology Z
1,800,000
500,000
a.
Technology X since it has the highest revenue.
O b. Technology X since it is the least costly.
c. Technology Z since it has the highest revenue.
O d. Technology Y since it has the highest revenue.
10

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

XYZ is evaluating a project that would last for 3 years. The project's cost of capital is 15.60 percent, its NPV is $43,200.00 and the expected cash flows are presented in the table. What is X? Years from today 0 1 2 3 Expected Cash Flow (in $) -55,800 71,000 -15,900 X O An amount less than $43,200.00 or an amount greater than $82,666.00 O An amount equal to or greater than $70,205.00 but less than $82,666.00 O An amount equal to or greater than $60,505.00 but less than $70,205.00 O An amount equal to or greater than $53,257.00 but less than $60,505.00 O An amount equal to or greater than $43,200,00 but less than $53,257.00 M
You are responsible to manage an IS project with a 4-year horizon. The annal cost of the project is estimated at $40,000 per year, and a one-time costs of $120,000. The annual monetary benefit of the project is estimated at $96,000 per year with a discount rate of 6 percent. a. Calculate the overall return on investment (ROI) of the project. b. Perform a break-even analysis (BEA). At what year does break-even occur?
ZLX is evaluating an investment and has generated the following: Initial investment at time t=0 is $2,000,000 Life of project is 8 years Initial investment depreciated to $0 via straight-line over entire life NWC investment required = $0.00 Expected market salvage value of investment assets = $0.00 Starting 1-year from today, and remaining constant over project life: Incremental sales as a result of investment = $1,600,000 / year Incremental expenses as a result of investment = $1,100,000 / year firm' tax rate = 28% What is the IRR of this investment? Enter rate in decimal form, rounded to fourth digit, as in "0.1234"
Using excel: show equations A investment of $400,000 in a machine produces before-tax net revenue of $100,000/yr for 10 years, at which time the machine will have a salvage value of $15,000. We assume $250,000 is borrowed at 15 % annual compound interest and repaid in 10 years. We will use a 10 year planning horizon, a 40% tax rate, a 10% BTMARR, and SLN depreciation. Determine (i) ATMARR, and then the preferred payment plan based on ATPW and determine the ATFW, ATAW, ATIRR, and ATERR for each of the following four plans: e) Plan 1: Pay interest each period, but make no principal payment until the end of the loan period f) Plan 2: Make equal end-of period principal payments and pay interest each period on the unpaid balance at the beginning of the period g) Plan 3: Make equal end-of period payments over the loan period h) Plan 4: Make no payment until the end of the loan period
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows Capital investment Annual net income: (a) Year 1 2 3 4 5 Total ow Transcribed Text Project Bono $160,000 Project Bono 14,000 Project Edge 14,000 Project Clayton 14.000 ow Transcribed Text 14,000 Your answer is incorrect. 14,000 $70,000 Project Edge Project Clayton $175,000 $200,000 18,000 17,000 16,000 12,000 9,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15% (Assume that cash $72,000 O Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. years Compute the cash payback period for each project. (Round answers to 2 decimal places, eg years C years 27,000 23,000 9 21.000 13,000 C 12,000 $96,000 1.50.) (b) The parts…
Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the profitability index for project A. (Round to 3 decimals) Year 0 1 2 3 4 5 Project A -15,000,000 2,000,000 3,000,000 5,000,000 5,000,000 6,000,000 Project B -15,000,000 6,000,000 6,000,000 6,000,000 1,000,000 1,000,000
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $176,000 $192,500 $212,000 Annual net income: Year 1 15,400 19,800 29,700 15,400 18,700 25,300 15,400 17,600 23,100 4 15,400 13,200 14,300 15,400 9,900 13,200 Total $77,000 $79,200 $105,600 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. (a) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) years Project Bono years Project Edge years Project Clayton
A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1. Project Name I II III IV Initial Investment (OMR) 44000 62000 100000 109000 Annual Cash inflow (OMR) 10000 22000 27000 44000 Identify the best project and decide the ranking based on the following profitability methods. a) Average rate of return. b) Payback period. c) Net Present value with discounting rate at 8% d) Benefit to cost ratio with discounting rate at 11% e) Internal rate of return for range of suitable discounting rate please solve d and e or all
A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1. Project Name I II III IV Initial Investment (OMR) 44000 62000 100000 109000 Annual Cash inflow (OMR) 10000 22000 27000 44000 Identify the best project and decide the ranking based on the following profitability methods. a) Average rate of return. b) Payback period. c) Net Present value with discounting rate at 8% d) Benefit to cost ratio with discounting rate at 11% e) Internal rate of return for range of suitable discounting rate
The proposed expansion of CIV Electronics' plant facilities requires the immediate outlay of $102,000. Expected net returns are given in the following table. Calculate the internal rate of return (IRR) Year 1 Year 2 Year 3 $Nil $24,000 $30,000 Year 4 Year 5 Year 6 The internal rate of return is%. (Round to the nearest tenth as needed.) $53,000 $48,000 $17,000
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $130,900. Project 2 requires an initial investment of $97,200. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 Years 1-7 Initial investment Net present value Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Net Cash Flows X Answer is complete but not entirely correct. Present Value of Annuity at 10% 26,460 X Project 1 $ 105,300 X 70,200…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS