Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selectedinformation on the four projects follows:Life ofthePresent ProjectNetInternalInvestmentRateValue$576,770$755,000 ș308,594$720,000 $442,949$920,000 $145,122ProjectRequired(years) of Return9A$870,00025%в141789248D168The net present values above have been computed using a 10% discount rate. The company wants your assistance in determiningwhich project to accept first, second, and so forth.Required:1. Compute the project profitability index for each project.2. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return.Complete this question by entering your answers in the tabs below.Required 1Required 2Compute the project profitability index for each project. (Round your answers to 2 decimal places.)ProjectProfitabilityProjectIndexAВD

Profitability index tells us how much benefit added on each amount of initial investment. it taken…

xford Company has limited funds available for investment and must ration the funds among four competing projects. Selected formation on the four projects follows: Life of Net the Internal Investment Present Project Rate (years) of Return 258 roject Required Value $870,000 $576,770 $755,000 $308,594 $720,000 $442,949 $920,000 $145,122 A 14 178 9 248 D 168 he net present values above have been computed using a 10% discount rate. The company wants your assistance in determining hich project to accept first, second, and so forth. equired: Compute the project profitability index for each project. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return.

xford Company has limited funds available for investment and must ration the funds among four competing projects. Selected formation on the four projects follows: Life of Net the Internal Investment Present Project Rate (years) of Return 258 roject Required Value $870,000 $576,770 $755,000 $308,594 $720,000 $442,949 $920,000 $145,122 A 14 178 9 248 D 168 he net present values above have been computed using a 10% discount rate. The company wants your assistance in determining hich project to accept first, second, and so forth. equired: Compute the project profitability index for each project. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return.

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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Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Project A Project Z $80,000 $64,000 4 years 9 years 0 0 $6,400 $20,160 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A Project Z Feedback Check My Work X % X %
Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Investment Present Value of Cash Life of the Project Internal Rate Project Required A $ 200,000 Inflows $294,323 (years) of Return 7 16% B $ 137,000 $ 267,000 с $ 104,000 $225,035 D $ 167,000 $ 303,136 12 7 3 21% 20% 19% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Note: Round your answers to 2 decimal places. Project Profitability Index A B C D In order of preference,…
Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 15% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Initial investment $ (100,000) Net cash flows in: Year 1 37,000 Year 2 Year 3 47,500 72,500 Project X2 $ (150,000) 78,000 68,000 58,000 a. Compute each project's net present value. b. Compute each project's profitability index. If the company can choose only one project, which should it choose on th basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's net present value. (Round your answers to the nearest whole dollar.) Net Cash Present Value of Present Value of Flows 1 at 15% Net Cash Flows Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value $ 0 $ 0 $ 0 Project X2 Year 1 Year 2 Year 3 Totals $ 0 $ EA Initial…
N
Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project Project J 0 1234 -$260,000-$260,000 114,000 105,000 89,000 78,000 91,000 100,000 a. Interest rate b. 102,000 109,000 a. At what interest rate would the company be indifferent between the two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Which project is better if the required return is above this interest rate? do %
Compute the IRR statistic for Project E. The appropriate cost of capital is 7 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project E Time: 0 1 2 3 4 5 Cash flow −$3,600 $1,110 $1,050 $900 $680 $480 Should the project be accepted or rejected?multiple choice rejected accepted
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year, what is the payback period? years
Management of Ivanhoe Measures, Inc., is evaluating two independent projects. The company uses a 13 percent discount rate for such projects. The costs and cash flows for the projects are shown in the following table. Year Project 1 Project 2 0 $8,812,840 -$10,781,200 1 3,363,400 2,021,330 2 1,788,290 3,848,800 3 1,367,600 3,173,090 4 1,088,900 4,104,310 5 1,111,380 4,130,780 6 1,723,940 7 1,319,290 k A What are their NPVs? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) Q Ac The NPV of Project 1 is $ and the NPV of Project 2 is $ Qu Mu
Compute the NPV statistic for Project U if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and roundyour final answer to 2 decimal places.) Project U Time: 0 1 2 3 4 5 Cash flow: -$2, 500 $750 $2, 480 -$720 $700 -$300
Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $241,666 $181,884 Net cash flows anticipated: Year 1 81,000 36,000 Year 2 59,000 55,000 Year 3 93,000 73,000 Year 4 80,000 68,000 Year 5 75,000 27,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X fill in the blank 1% Project Y fill in the blank 2% B. Which project should be recommended.
Oxford Company has limited funds available for investment and must ration the funds among the four competing projects shown below: Project InvestmentRequired PresentValue of Cash Inflows Life oftheProject(years) InternalRateof Return A $ 170,000 $ 329,323 7 12% B $ 118,000 $ 302,000 12 17% C $ 105,000 $ 260,035 7 16% D $ 165,000 $ 338,136 3 15% The net present values above have been computed using a 10% discount rate. Required: Compute the profitability index for each project. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return
Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Present Value of Life of the Project A Investment Required Cash Inflows Project Internal Rate (years) of Return $ 160,000 $ 259,323 7 16% B $ 135,000 $ 232,000 12 18% $ 100,000 $ 190,035 7 D $ 164,000 $ 268,136 3 22% 17% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Net Present Value Profitability…

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