Compute for the benefit ratio of the following projects. Project cost Gross income Operating cost Life of project Interest rate O a. 1.20 O b. 1.70 O c. 1.07 O d. 1.02 5,000,000 2,000,000 1,000,000 20 years 10%
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- PW(benefits) PW(operating and maintenance costs) PW(capital cost) Project A £17 000 000 5 000 000 6 000 000 Project B £17 000 000 11 000 000 1 000 000 (a) Compute the benefit-cost ratios for both projects. (b) Compute the modified benefit-cost ratios for both projects. (c) Compute the benefit-cost ratio for the increment between the projects. (d) Compute the present worths of the two projects. (e) Which is the preferred project? Explain.Question 2 Compute the B/C ratio at i-10%, for the following project and justify if you selected it or not, based on economic view point (Banefits) $30 $30 $ 20 $ 20 $5 $5 $8 $8 $10 $10 (Recurring costs) (Investment)The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project. E (Click the icon to view the projects information.) Requirements 1. Rank the four projects in order of preference by using the a. net present value. d. payback period. 2. Which method(s) do you think is best for evaluating capital investment projects in general? Why? c. internal rate of return. b. project profitability index. e. accounting rate of return. Requirement 1. Rank the projects in order of preference. (a) (b) (c) (d) (e) Net Present Profitability Internal Rate Payback Accounting Rate Value Index of Return Period of Return 1st preferred A C 2nd preferred 3rd preferred C 4th preferred ADB D AB
- Consider the following two projects, X and Y: Period Project X Project Y 0 $(100,000) $(120,000) 1 $22,000 $0 2 $22,000 $0 3 $22,000 $0 4 $22,000 $0 5 $45,000 $175,000 Regarding the internal rate of return, which of the following statements is correct? The internal rate of return of Project Y is greater than the internal rate of return of Project X. The internal rate of return of Project X is equal to the internal rate of return of Project Y. O The internal rate of return of Project X is greater than the internal rate of return of Project Y. The internal rate of return of Projects X and Y cannot be determined based on this information.Please help answer From Question 3.1 to 3.5 REQUIREDStudy the information provided below and calculate the following:3.1 Payback Period of Project A (answer expressed in years, months and days). 3.2 Accounting Rate of Return (on average investment) of Project B (answer expressed totwo decimal places).3.3 Net Present Value of both projets (amounts rounded off to the nearest Rand). 3.4 Benefit Cost Ratio of Project A (answer expressed to three decimal places). 3.5 Internal Rate of Return of Project B (answer expressed to two decimal places). INFORMATIONThe following information relates to two possible capital expenditure projects being considered by EdamLtd. Because of capital rationing, only one project can be accepted.Project A Project BInitial cost R800 000 R800 000Expected useful life 5 years 5 yearsAverage annual profit R80 000 R80 000Expected net cash inflows: R RYear 1 240 000 240 000Year 2 260 000 240 000Year 3 280 000 240 000Year 4 220 000 240 000Year 5 200 000 240 000The…Determine the best alternatives for a government project with the following data: PROJECT A B C ANNUAL BENEFIT P250,000.00 P320,000.00 P350,000.00 ANNUAL COSTS P100,000.00 P135,000.00 p180,000.00 B/C RATIO 2.5 2.37 1.94 What is the best Project and its incremental ratio? a. A = 1.2 b. A = 2 c. B = 2.0 d. B = 1.18
- 14. A project has estimated the following benefit possibilities for the year: Benefits ($) Probability. 100 0.25 0.35 0.25 O $3,642 150 O $193.50 O $176 220 Expected benefit is: 290 $391.00 0.15If a $300,000 investment has a project profitability index of 0.25, what is the netpresent value of the project?a. $75,000b. $225,000c. $25,000d. $275,000Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?
- a. Compute annual rate of return, Pay back period b NPV using 14% discounts rate , Is the Project acceptable using this discount rate Compute NPV using 11% discounts rate. Is the Project acceptable using this discount rateQuestion #1a) What is a “transfer price?â€b) List and describe 3 main reasons for using transfer prices.Question #2Consider the following information about a potential project:Investment requiredExpected annual project revenueExpected annual project expensesRequired rate of returnCurrent division return on investment$3,000,000$6,000,000$5,550,00011%18%a) Calculate the project’s return on investment.b) Based solely on ROI, is this project in the firm’s best interests? Why or why not?c) Is this project in the division manager’s best interests? Why or why not?d) Perform DuPont Analysis on this project.e) What is the project’s residual income?Question #3List and describe five traits that can differentiate a customer that is relatively inexpensive to service from a customer that is relatively expensive to service.Question #4List and describe five actions a firm can take if a customer appears…(c) Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Annual rate of return Project Bono % Project Edge % Project Clayton %
