Table 1: Project DataProjectNPV (M$)Risk (%)Capital (M$)A19414B22S10C24612D27715E21513The budget constraint may be stated as:*A+c+2%p <= 014% +10x12x15xD -13%E4314% -10%E-12x15xD -13%E43%B5%E

In the problem you've shared, you're working with a set of investment projects and a budget…

Answered: Table 1: Project Data Project NPV (M$)…

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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Problem 8-6 Profitability Index (LO3) The following are the cash flows of two projects: Year Project A Project B $ (270) $ (270) 1 150 170 2 150 170 3 150 170 4 150 If the opportunity cost of capital is 12%, what is the profitability Index for each project? Note: Do not round Intermediate calculations. Round your answers to 4 decimal places. Project A B Profitability Index
NPV profiles WACC (Dollars in Millions) Plan A Plan B Project NPV Calculations: NPVA NPVB Project IRR Calculations: IRRA IRRB NPV Profiles: Discount Rates 0% 5% 10% 15% 20% 22% 25% 11.00% NPVA $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 -$40.00 Formulas #N/A #N/A -$11.00 $2.47 $2.47 $2.47 #N/A #N/A NPVB 1 $6.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 3 $6.39 $6.39 4 $6.39 $2.47 5 6 7 $6.39 $6.39 $6.39 $2.47 $2.47 8 9 $6.39 $6.39 $2.47 $2.47 $2.47 10 $6.39 $2.47 11 $6.39 12 $6.39 13 $6.39 $2.47 $2.47 $2.47 14 $6.39 15 $6.39 $2.47 $2.47 16 $6.39 $6.39 $2.47 17 39 $2.47
KLA Cost Ziege Systems is considering the following independent projects for the coming year Project Required Investorent Rate of Return Risk A $4 million 12.25% Hish High $5 million Low B C DEFGH $3 million $2 million $6 million $5 million $6 million $3 million 500 14.75 10.25 9.75 13.25 13.25 7.75 12.25 million Average High Average Low Low } If Ziege con only invest a total of $13 million what would be the dollar size of its capital budget? $ million What would be the dollar size of its capital budget? $
Details WACC 0 SGWN-O 1 2 3 4 5 6 7.80% Project A Project B -1225 395 402 423 432 489 512 -2146 592.5 603 634.5 648 733.5 768 1. Construct NPV profile table by using cashflows from Project A and B above. 2. Draw NPV profile 3. Compute crossover rate To receive EC your work has to be done in Excel.
QUESTION 1 You are considering investment in a project with the following outcomes: Investment Return -10% 5% 10% 12% State State 1. State 2 State 3 State 4 Probability 20% 35% 15% 30% What is the project's standard deviation? 4.85% 6.34% 7.96% 9.85% 10.34%
Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230 Project C: IRR = 6%, Initial cost = 300, NPV = 300 Project D: IRR = 22%, Initial cost = 100, NPV = 260 If you can only choose 1 of the above projects above, which one should you choose? Project A Project B Project C Project D Not enough information to determine which project is preferred
3. A. B. C. time Capital Budgeting Project S Project L D. 0 -1000 -1000 1 500 100 2 400 200 3 300 300 4 200 400 5 100 500 USE NPV METHOD, assuming the WACC is 10%. Which project will you invest? Use IRR method, which project will you invest? Assuming WACC is 10%, use MIRR, which project will you invest? Use payback period method, which project will you invest?
Consider the following projects: Project Co C₁ Cash Flows ($) C2 C3 CA C5 A -1,300 1,300 0 0 0 0 B -2,600 1,300 1,300 4,300 1,300 1,300 C -3,250 1,300 1,100 0 1,300 1,300 a. If the opportunity cost of capital is 9%, which project(s) have a positive NPV? b. Calculate the payback period for each project. c. Which project(s) would a firm using the payback rule accept if the cutoff period is three years? Complete this question by entering your answers in the tabs below. Required A Required B Required C If the opportunity cost of capital is 9%, which project(s) have a positive NPV? Note: Do not round intermediate calculations. Positive NPV project(s) Projects B and C Required A Required B
Project A has the following estimated cash flows and present values:Year Cash flow $ Discount factor@ 12% Present value $0 Cost (95 000) 1.0 (95 000) 1–5 Contributionper annum 50 000 3.605 180 250 1–5 Fixed costsper annum (25 000) 3.605 (90 125) 5 Residual value 20 000 0.567 11 340 The benefit of using sensitivity analysis in an investment appraisal would be:
Data for Fun 4 All, Inc.'s capital budgeting projects: Project 1 2 3 WACC 10% 10% 10% NPV 500 550 -300IRR 11% 10.50% 9% Based on these data, knowing that these projects are INDEPENDENT, you would choose project A.Project 2 B.Project 3 C.Project 1 D.Project 1 and 2.
Problem 8-23 Profitability Index (LO3) Consider the following projects: Co C₁ -$ 2,450 +$ 2,350 -2,450 +1,790 Project A B a. Calculate the profitability index for A and B assuming a 23% opportunity cost of capital. Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B C₂ +$ 1,550 +1,798 Profitability index ооо b. According to the profitability index rule, which project(s) should you accept? Project A Project B Both ONeither
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Table 1: Project Data Project NPV (M$) Risk (%) Capital (M$) A 19 4 14 B 22 S 10 C 24 6 12 D 27 7 15 E 21 5 13 The budget constraint may be stated as: *A+c+2%p <= 0 14% +10x12x15xD -13%E43 14% -10%E-12x15xD -13%E43 %B5%E