Question 1.Ultimate Ltd. a sausage producing company, intending to undertake a new project in 2021,required £280,000 of initial investment. The cost of capital for this project is estimated at 12%per annum.A consultant of Ultimate Ltd. has come up with the following cash flow projections:Cashflows/Years 2022Cash inflows (£) 13,0002023202420252026202757,00086,000107,000140,000250,000Cashoutflows 48,00052,00047,00058,00058,00072,000(£)As the Finance Director of YY Ltd., you are required to:a) Appraise the proposed project using the Net Present Value (NPV) techniqueb) Advice management on the financial viability of the projectc) Advice managem ent on any other factors that need consideration.

Net Present Value : The Net Present Value is the net of Present value of net cash inflow and Present…

Ultimate Ltd. a sausage producing company, intending to undertake a new project in 2021, required £280,000 of initial investment. The cost of capital for this project is estimated at 12% per annum. A consultant of Ultimate Ltd. has come up with the following cash flow projections: Cashflows/Years 2022 Cash inflows (£) 13,000 2023 2024 2025 2026 2027 86,000 47,000 57,000 107,000 140,000 250,000 Cash outflows 48,000 52,000 58,000 58,000 72,000 (£) As the Finance Director of YY Ltd., you are required to: a) Appraise the proposed project using the Net Present Value (NPV) technique b) Advice management on the financial viability of the project c) Advice management on any other factors that need consideration.

Ultimate Ltd. a sausage producing company, intending to undertake a new project in 2021, required £280,000 of initial investment. The cost of capital for this project is estimated at 12% per annum. A consultant of Ultimate Ltd. has come up with the following cash flow projections: Cashflows/Years 2022 Cash inflows (£) 13,000 2023 2024 2025 2026 2027 86,000 47,000 57,000 107,000 140,000 250,000 Cash outflows 48,000 52,000 58,000 58,000 72,000 (£) As the Finance Director of YY Ltd., you are required to: a) Appraise the proposed project using the Net Present Value (NPV) technique b) Advice management on the financial viability of the project c) Advice management on any other factors that need consideration.

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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Nn1. Account
A project is expected to provide the cash flows indicated below. Would you invest GH¢100000 in this project if the cost of capital is: (a) ji = 7%, (b) ji = 14%? %3D Year end 1 3 4 Cash flow GH¢40 000 GH¢25 000 GH¢35 000 GH¢30 000
An investor is presented with alternative projects, A and B with the following end-of-year cash flows. Each project requires an investment of GH¢200000. Which project would be chosen if (a) ji = 6%; (b)j1 = 8% Year end 1 3 4 Project A GH¢80 000 GH¢70 000 GH¢60 000 GH¢35 000 Project B GH¢30 000 GH¢40 000 GH¢40 000 GH¢150 000
Problem-11: The Corporation is considering a capital investment of Tk. 12,00,000 in a project, which is expected to yield the following cash flows: Year Cash inflow 1 2 3 4 to 6 7 150000 180000 160000 140000 190000 If the required rate of return is 12%, determine (i) NPV of the project and (ii) IRR of the project. Is the proposal an acceptable one?
Subject: acounting
A company is considering a project with the following cash flows: Initial investment of £130,000, Income in 1st year of £0, Income in 2nd year of £80,000, and Income in 3rd year of £120,000 This income is expected to be received half-way through the year. Which of the following gives the INTERNAL RATE OF RETURN for the project? (correct answer = 23.08%, no tables, ONY formulas)
(a) ABC Ltd. is considering investing in a 2-year project which is expected to generate the following year-end cash flows: C1 = $110 million, C2 = $115 million. The yearly discount rate for the project is 10%. The initial cost of the project is $200 million. (i) Compute the Profit (Revenue – Cost) and NPV of the project. (ii) Based on the answer of part (a), should the project be accepted? Explain. (b) John has just purchased an apartment at a price of $5,000,000. He made a down-payment of $2,000,000 and financed the remaining with a 30-year mortgage at 12% per annum, compounded monthly. (a) Determine the size of the fixed month-end payments. (b) Calculate the interest payment and the amount of principal paid in the 121st loan repayment.
Required information [The following information applies to the questions displayed below.] A company is considering investing in a new machine that requires a cash payment of $50,939 today. The machine will generate annual cash flows of $21,208 for the next three years. What is the internal rate of return if the company buys this machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow -$ 148,000 68,000 71,000 55,000 1 2 what is the IRR for this project?
Question 2: Somutech company limited is considering investing $4,500 into an IT infrastructure project. Projected cash outflow and inflows over a 5-year period are as follows; 50% Discount rate 0 1 2 3 4 5 Outflows Inflows 4500 3000 2000 2000 4000 8000 Calculate the net present value of this project. Based on the NPV, would you consider this project a profitable venture?
answer e.g. 168 investments? 2. 2.1 2.2 2.3 2.4 Getum Ltd is considering investing in project Zeta. The following details relate to this project. Project Zeta R562 500 Initial investment Expected economic lifetime Minimum required rate of return Net annual cash inflows: Management Accounting Workbook 1st year 2nd year 3rd year 4th year 4 years 12% R180 000 R195 000 R210 000 R220 000 Required Calculate the following in respect of Project Zeta. The payback period (answer expressed in years, months and days) The net present value (NPV) (round off amounts to the nearest Rand) The internal rate of return (IRR) (answer correct to 2 decimal places) Refer to your calculations in question 2.2 and state whether Getum Ltd should invest in Project Zeta or not. Motivate your answer.
A company is considering a new investment project with the following cash flow estimates: Year 0: Initial Investment = -$1,000,000 Year 1: Cash Inflow = $400,000 Year 2: Cash Inflow = $600,000 Year 3: Cash Inflow = $800,000 Year 4: Cash Inflow = $1,000,000 The company's required rate of return for this project is 15%. What is the NPV(Net Present Value) of the project?

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