e optimal investment that should be recommended to Lewis
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- Lewis Services is evaluating six investment opportunities (projects). The following table reflects each project’s net present value NPV and the respective initial investments required. All of these projects are independent. Project NPV Investment I 2,500 2,500 II 4,000 20,000 III 7,500 30,000 IV 8,000 40,000 V 2,000 10,000 VI 2,500 5,000 Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services’ management? I, II, III, V, and VI I, II, III, IV, V, and VI I, III, and VI I, III, V, and VILewis Services is evaluating six investment opportunities (projects). The following table reflects each project’s net present value NPV and the respective initial investments required. All of these projects are independent. Project NPV Investment I 2,500 2,500 II 4,000 20,000 III 7,500 30,000 IV 8,000 40,000 V 2,000 10,000 VI 2,500 5,000 Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services’ management? Choices a. I, II, III, IV, V, and VI b. I, III, and VI c. I, III, V, and VI d. I, II, III, V, and VILewis Services is evaluating six investment opportunities (projects). The following table reflects each project's net present value NPV and the respective initial investments required. All of these projects are independent. Project NPV Investment 2,500 2,500 II 4,000 20,000 II 7,500 30,000 IV 8,000 40,000 2,000 10,000 VI 2,500 5,000 Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services' management? O I. II, and VI O I, II, V, and VI O , II, II, IV, V, and VI OI, II, III, V, and VI
- 16 Lewis Services is evaluating six investment opportunities (projects). The following table reflects each project’s net present value NPV and the respective initial investments required. All of these projects are independent. Project NPV Investment I 2,500 2,500 II 4,000 20,000 III 7,500 30,000 IV 8,000 40,000 V 2,000 10,000 VI 2,500 5,000 Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services’ management? Group of answer choices I, III, and VI I, II, III, IV, V, and VI I, III, V, and VI I, II, III, V, and VIDaymore plc is currently considering three investment opportunities. The following is the details of the investments:-Project A:-1. initial outlay $80m2. Future net inflows Year 1: $190mYear 2: $10mProject B:-1. initial outlay $140m2. Future net inflows Year 1: $180mYear 2: $120mProject C:-1. initial outlay $90m2. Future net inflows Year 1: $10mYear 2: $220mThe company has a capital budget that is restricted in the year of the investment and it will not be possible to undertake all three projects in full. The investment opportunities are independent of one another and each project is divisible (that is, it is possible to undertake part of an investment and to receive a pro-rata return). The cost of capital of the company is 12% and the company uses the net present value method of investment appraisal.Required:Calculate and determine the ranking of the three investment opportunities? (The ranking for the first choice, second choice, and third choice is 1, 2, and 3 respectively). Show…XY Company is considering 5 investment projects as follows: Project Investment ($) Profitability index (PI) A 10,000 1.2 B 6,000 1.1 C 18,000 1.6 D 14,000 0.9 E 12,000 1.3 The company has $30,000 available for investment. Projects C and E are mutually exclusive. All projects can be undertaken only once and are not divisible. Required: Calculate the projects’ NPV
- XY Company is considering 5 investment projects as follows: Project Investment ($) Profitability index (PI) A 10,000 1.2 B 6,000 1.1 C 18,000 1.6 D 14,000 0.9 E 12,000 1.3 The company has $30,000 available for investment. Projects C and E are mutually exclusive. All projects can be undertaken only once and are not divisible. Required: (iii)Calculate the maximum NPV earned from the projects to be picked.Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Annual Life of Project Investment Income Project 22A $242,800 $16,840 6 years 23A 275,000 20,680 9 years 24A 282,000 15,700 7 years Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation. Click here to view PV table. (a)Consider three investment projects: A1, A2, and A3. Each project has the same service life, and the present worth of each component value (B, I, and C') is computed at 10% as follows: (a) If all three projects are independent, which projects would be selected, based on BC(i)?(b) If the three projects are mutually exclusive, which project would be the best alternative? Show the sequence of calculations that would be required in order to produce the correct results. Use the B/C ratio on incremental investment.
- A2. (PaybackandNPV)Threeprojectshavethecashflowsgivenhere.Thecostofcapitalis10%. a. Calculate the paybacks for all three projects. Rank the projects from best to worst based on their paybacks. Calculate the NPVs for all three projects. Rank the projects from best to worst based on their NPVs c. Why are these two sets of rankings different? YEAR 0 1 2 3 4 5Project 1 −10 4 3 2 1 5 Project 2 −10 1 2 3 4 5 Project 3 −10 4 3 2 1 10Sunland Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment 22A $243,500 271,400 23A 24A 283,000 Annual Life of Income Project $17,320 6 years 20,600 9 years 7 years 15,700 Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Sunland Company uses the straight-line method of depreciation.For the projects given in the table below to: • Classify the projects into simple investment or non-simple investment. Decide if project A is accepted or rejected based on the IRR criterion, at MARR of 20%. If projects C and D are mutually exclusive projects, determine which project is more economical at MARR of 70%. PROJECT CASH FLOW SR B -4 000 -4 000 -125 000 -125 000 1 8 000 760 30 000 20 000 2 -3 000 4 000 30 000 40 000 3 120 000 130 000 ---- NOTE: The general solution of a quadratic equation (ax? + bX + c 0) is -bt vb2 - 4ac X12 = 2a
