You are in charge of a project with a degree of operating leverage of 1.09. What will happen to the operating cash flows if the number of units you sell increases by 6.2 percent? A 6.20 percent decrease B 6.76 percent increase C 5.69 percent increase D 5.69 percent decrease
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- 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:Please answer fast please arjent help pleaseHi expart Provide solution
- What is the true IRR of the following project? Assume the firm would be able to reinvest the cash flows at a 7% rate of return. Year A O 1 2 3 a. 14.85% b. 15.32% C. Question 27 Select one: 14.21% d. -1,000 14.00% 600 400 400Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?
- Help with this questionA project has the following cash flows: Year Cash Flows 0 $ 128,200 12 1 2 3 4 49,400 63,800 51,600 28,100 The required return is 8.7 percent. What is the profitability index for this project? Multiple Choice 1.142 1.003 .803 1.0385. It is estimated that an investment in a new process will cause the following cash flow in dollars. End Year 0 1 2 3 4 5 6 Cash inflow (S) 600 100 150 200 200 200 200 The firm wishes to earn at least 15% per annum on projects of this type. i. Calculate a. The NPV of the project b. The IRR of the project ii. Hence or otherwise comment on the course of action to be taken 6. Consider the payoff table below which shows decision alternatives (d₁; d2 and d3) that a company is faced with under three different states of nature (S₁; S₂ and S3). d/sj S₁ S2 S3 di 35 60 16 d₂ 21 85 62 d3 40 15 32 P(S₁) 0.25 0.65 0.1 Determine the appropriate decision that the company should make using the following approaches: i. Optimistic approach (maximax) ii. Conservative approach (maximin) iii. Minimax Regret Approach iv. Expected Monetary Value (EMV) approach. 7. Distinguish between the following terms commonly used in Business Mathematics: i. Cash Discounts and Trade Discounts ii. Prediction and…
- Consider projects A and B with the following cash flows: Ce $32 57 $16 +$16 + 32 +$ 16 32 a-1. What is the NPV of each project if the discount rate is 12%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 6-2. Which project has the higher NPV? b-1. What is the profitability Index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b-2. Which project has the higher profitablity index? c. Which project is most attractive to a firm that can ralse an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can ralse? ok nt mces Project A Project B a-1. NPV of ench project if the discount rate is 12% a-2. Which project has the higher NPV? b-1. Profitability index of each projoct b-2. Which project has the higher protitability index? Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for…Consider the following project: Period Net cash flow 0 -100 1 0 2 78.55 3 78.55 The internal rate of return is 20%. The NPV, assuming a 20% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) 1 Period 2 3 Change in value (economic depreciation) (20.00) 54.55 65.46 Expected economic income2