UNITAR International University has the opportunity to invest RM400,000 in a new project. However, due to cash flow concerns, the CEO wants to know when can UNITAR earn back the initial investment. As UNITAR's business analyst, you have anticipated that the new project will generate inflows of RM57,000; RM70,000; RM100,000; RM150,000; and RM200,000 respectively for an expected FIVE (5) years after the completion of the project. Assuming that UNITAR's required rate of return is 10% and the inflation rate remains steady at 5%, answer below questions. (Round your answers into TWO (2) decimal places): a) Using the payback period method, determine the return of this project after FIVE (5) years.

UNITAR International University has the opportunity to invest RM400,000 in a new project. However, due to cash flow concerns, the CEO wants to know when can UNITAR earn back the initial investment. As UNITAR's business analyst, you have anticipated that the new project will generate inflows of RM57,000; RM70,000; RM100,000; RM150,000; and RM200,000 respectively for an expected FIVE (5) years after the completion of the project. Assuming that UNITAR's required rate of return is 10% and the inflation rate remains steady at 5%, answer below questions. (Round your answers into TWO (2) decimal places): a) Using the payback period method, determine the return of this project after FIVE (5) years.

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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The UniMAP Holdings Group is considering investing RM10.0 million in a new shopping complex in Kangar, Perlis. The group has estimated that the shopping complex once built, will contribute RM1,250,000 per year for 10 years. The board of trustees of the group require that any new investment to be undertaken by the group should generate a required rate of return (MARR) of at least 12% per year of its investment. Assuming that at the end of 10 years period the shopping complex will retain about 60% of its initial investment as a salvage value. What should be the decision of the group on this proposed asset investment?
Advance Inc. is considering investing £10 million on a project. It is expected that the project willgenerate annual cash inflows of 1.5 million in perpetuity. The corporate’s opportunity cost of capitalfor this project is 12%.a) Demonstrate the net present value (NPV) approach to evaluate whether to invest in thisproject.b) Demonstrate the internal rate of return (IRR) approach to evaluate whether to invest in thisproject.c) Which approach should be adopted when NPV and IRR generates conflicting results, andwhy?
Semarak Enterprises is considering a new three-year expansion project and is looking closely at investing in a new machine. The project will require an investment in a new production machine for an invoice price of RM2 million, and it would cost an additional RM320,000 to properly install the machine. To properly operate the machine, inventory must be increased by RM250,000. To purchase the new machine, the firm would have to borrow RM500,000 at 5% interest rate from Private Bank resulting in additional interest payment of RM25,000 per year. The machine will be depreciated straight-line to zero over its three-year tax life, after which time it will be sold for RM180,000. The company also hired a marketing firm to analyse the market at a cost of RM15,000. An extract of the marketing report is as follow: -The project is estimated to generate RM1.735 million in annual sales, with costs ofRM650,000. -The required return on the project is 12 percent and the tax rate is 21 %.
Brett Collins is reviewing his company's investment in a cement plant. The company paid $16,000,000 five years ago to acquire the plant. Now top management is considering an opportunity to sell it. The president wants to know whether the plant has met original expectations before he decides its fate. The company's desired rate of return for present value computations is 10 percent. Expected and actual cash flows follow: (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Expected Actual Year 1 $3,310,000 2,600,000 Required Year 2 $5,090,000 2,980,000 Year 3 $4,560,000 4,860,000 Year 4 $5,090,000 3,810,000 Year 5 $4,290,000 3,540,000 a.&b. Compute the net present value of the expected and actual cash flows as of the beginning of the investment. Note: Negative amounts should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest whole dollar.
Brett Collins is reviewing his company's investment in a cement plant. The company paid $15.500,000 five years ago to acquire the plant. Now top management is considering an opportunity to sell it. The president wants to know whether the plant has met original expectations before he decides its fate. The company's desired rate of return for present value computations is 10 percent. Expected and actual cash flows follow: (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Expected Actual Year 1 $3,380,000 2,700,000 Year 2 $4,950,000 3,060,000 Net present value (expected) Net present value (actual) Year 3 $4,580,000 4,900,000 Year 4 $5,040,000 Year 5 $4,250,000 3,860,000 3,530,000 Required a.&b. Compute the net present value of the expected and actual cash flows as of the beginning of the investment. Note: Negative amounts should be Indicated by a minus sign. Round your Intermediate calculations and final answers to the nearest whole dollar.
Vishano
You are thinking of making an investment in a new factory. The factory will generate revenues of $1,960,000 per year for as long as you maintain it. You expect that the maintenance costs will start at $90,160 per year and will increase 5% per year thereafter. Assume that all revenue and maintenance costs occur at the end of the year. You intend to run the factory as long as it continues to make a positive cash flow (as long as the cash generated by the plant exceeds the maintenance costs). The factory can be built and become operational immediately and the interest rate is 6% per year. a. What is the present value of the revenues? - b. What is the present value of the maintenance costs? c. If the plant costs $19,600,000 to build, should you invest in the factory? EIER
The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of $145,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 4 percent per year forever. The project requires an initial investment of $1,900,000. I have attached the full question but would like help with part b.
IMPORTANT: PLEASE SAVE ALL YOUR HAND CALCULATIONS IN A FILE SO THAT YOU CAN SUBMIT THEM IF REQUIRED BY THE LECTURER. You are considering investing RM62000 in new equipment. You estimate that the net cash flows will be RM11000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 8-year service life and a net salvage value of RM5200 at that time. Assume MARR of 7%. a Calculate the annual capital cost CR (ownership cost) for the equipment. b.Determine the equivalent annual revenue. c.Is this a wise investment? Y/N. Submit Format: 7882 Format: 36630 Format: A
It is estimated that a certain piece of equipment can save as $25,000 per year in labour and materials. The equipment has an expected life of six years and no market value. If the company must earn a 20% annual return on such investments, select the appropriate cash flow diagram that represents this transaction. O A. O B. P= ? A = $25,000 P= ? A= $25,000 1 2 3 4 End of Year 5 6 2 3 4 End of Year Oc. O D. A= $25,000 A = $25,000 ! 3 End of Year 5 6 1 2. 3 6 End of Year P=? P=? Lütfen birini seçin: O A. C О В. В O C. A O D. D
The Tech company. Inc. is currently making windfall profits from the sales of financial programming software, so the company is looking for new investment opportunities to invest the profits and maintain its growth. The firm decided to undertake one of these two projects. Project A: invest in the development and improvement of the already existing software (create a new version) Project B: launch into the manufacture of computer equipment (external hard drives) The cash flow projections for the two projects are as follows: 0 1 2 3 4 I0 FM1 FM2 FM3 FM4 Project A 100,000 60,000 40,000 30,000 20,000 Project B 350,000 60,000 100,000 130,000 160,000 The rate of return required by senior management is 10% 1. Calculate simple payback period and discounted payback period, and give your recommendation, if the maximum period acceptable to senior management is 3 years? 2. Calculate the NPV (net present value) of each project and give…
The firm is considering replacing their computer system. The incremental cash flow from assets for this project are an $80,000 initial investment and and the expected cash flows are $36,000 per vear for the next 3 years. Based on the IRR, should you accept or reject the project? Note: You have already calculated the WACC in the previous question. This is here as a reference in case you need it: Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock that pays an annual dividend of $8, and 200,000 bonds with a 10 percent coupon (semiannual interest) and 20 years to maturity. At present, the common stock is selling for $50 per share, the bonds are selling for $950.62 per $1,000 of face value, and the preferred stock is selling at $74 per share. The estimated market return is 13%, the risk free rate is 8%, and Bluefield's beta is 1.4. Bluefield's tax rate is 30 percent. Short Answer Toolbar navigation BIUS E = E E E E

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