The Dammon Corp. has the following investment opportunities:Machine AMachine BMachine C($10,000 cost) ($22,500 cost) ($35,500 cost)InflowsInflowsInflowsyear 1 $6,000 year 1 $12,000 year 1 $-0-year 2year 3 3,000 year 33,000 year 27,5001,500 year 31,500 year 4 20,000year 2 30, 0005,000year 4 -0-year 4Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?Multiple ChoiceMachine CMachine BMachine A

GIVEN year A B C 0.00 -10000.00 -22500 -35500 1 6000 12000 0 2 3000 75000 30000 3 3000…

The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $6,000 year 1 $12,000 year 1 $-0- year 2 3,000 year 2 year 3 3,000 year 3 7,500 1,500 year 3 1,500 year 4 20,000 year 2 30, 000 5,000 year 4 -0- year 4 Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?

The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $6,000 year 1 $12,000 year 1 $-0- year 2 3,000 year 2 year 3 3,000 year 3 7,500 1,500 year 3 1,500 year 4 20,000 year 2 30, 000 5,000 year 4 -0- year 4 Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?

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 Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $ 6,000 year 1 $ 12,000 year 1 $ -0- year 2 3,000 year 2 7,500 year 2 30,000 year 3 3,000 year 3 1,500 year 3 5,000 year 4 -0- year 4 1,500 year 4 20,000 Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?
1. A manufacturing company wants to expand its product line. There are two investment projects which could help the company achieve its aim. The data for each investment project is shown below. Data for the investment projects A and B Project A Year Initial investment outlay Cash inflows Personnel expenses Material expenses Maintenance expenses 0. 1 3 125,000 75,000 22,500 15,000 2,500 3,750 80,000 22,500 20,000 2,500 3,750 95,000 22,500 22,500 5,000 3,750 95,000 22,500 22,500 8,750 5,000 86,250 22,500 22,500 10,000 5,625 12,500 Other cash outflows Liquidation value Project B Year Initial investment outlay Cash inflows Personnel expenses Material expenses Maintenance expenses 2. 3. 4 225,000 155,000 140,000 27,500 27,500 22,500 25,000 8,750 11,250 108,750 93,750 27,500 27,500 22,500 22,500 15,000 17,500 3,750 3,750 125,000 27,500 24,000 14,000 4,000 15,000 Other cash outflows 6,250 3,750 Liquidation value The Discount Rate is 8% a. Assess the relative profitability of the two options…
of stion Given the following information about projects A and B: Project A Project B -10,000 -10,000 4,000 3,000 10,000 Time 0 Time 1 Time 2 Time 3 If alpha company uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? Select one: O O O 5,000 4,000 3,000 a. Project A b. Project B c. Project A and Project B have the same ranking. d. Cannot calculate a payback period without a discount rate.
The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $35,000 $65,000 $21,000 $51,000 2 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 Total $105,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627…
The management of Revco Products is exploring four different investment opportunities. Information onthe four projects under study follows:Project Number1 2 3 4Investment required ....................... $(270,000) $(450,000) $(360,000) $(480,000)Present value of cashinfl ows at a 10%discount rate .............................. 336,140 522,970 433,400 567,270Net present value .......................... $ 66,140 $ 72,970 $ 73,400 $ 87,270Life of the project ........................... 6 years 3 years 12 years 6 yearsInternal rate of return ..................... 18% 19% 14% 16%The company’s required rate of return is 10%; thus, a 10% discount rate has been used in the present valuecomputations above. Limited funds are available for investment, so the company can’t accept all of theavailable projects.Required:1. Compute the project profitability index for each investment project.2. Rank the four projects according to preference, in terms of:a. Net present valueb. Project profitability…
A company is looking at five different potential projects, but it can only do one of them. Which project should the company select? For this question, use the following information: Project A B. D Initial Investment -3,300 -6,500 -5,300 -7,000 -5,500 Annual Benefit 650 1,200 950 1,250 1,000 Salvage Value 150 425 300 1,000 200 Useful life 10 10 10 10 10 IRR 14.99% 13.51% 12.74% 13.26% 12.93% E-A C-A B-A D-A D-B Delta IRR 9.68% 8.88% 11.97% 11.78% 10.90% C-E B-E D-E B-C D-C Delta IRR 18.90% 16.44% 14,29% 16.79% 14.71% Which project should be selected if MARR is 10% (mutually exclusive)? A OD OB OE
The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $55,000 $171,000 $116,000 $274,000 2 55,000 171,000 88,000 231,000 3 55,000 171,000 44,000 162,000 4 55,000 171,000 19,000 111,000 5 55,000 171,000 8,000 77,000 Total $275,000 $855,000 $275,000 $855,000 Each project requires an investment of $500,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279…
An interior design studio is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow Cash Flow (0) -$64,000 31,000 31,000 31,000 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161)) Project I Project II -$18,000 9,700 9,700 9,700 Profitability Index a-2 If the company applies the profitability index decision rule, which project should the firm accept? O Project I O Project II Project I Project II b-1 What is the NPV for both projects? (Round your answers to 2 decimal places. (e.g., 32.16)) O Project I Project II NPV b-2lf the company applies the NPV decision rule, which project should it take?
Coffer Company is analyzing two potential investments. Cost of machine Project X $ 97,090 Net cash flow: Year 1 Year 2 Year 3 Year 4 Project Y $ 72,000 36,500 3,700 36,500 33,500 36,500 33,500 0 13,000 If the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be selected? Multiple Choice ○ Project Y. ○ Project X. Both X and Y are acceptable projects. Neither X nor Y is an acceptable project. Project Y because it has a lower Initial Investment.
ital investment committee of Iguana Inc. is considering two capital investments. The estimated ig income and net cash flows from each investment are as follows: Year Robotic Assembler ng Income Robotic Assembler Net Cash Flow Warehouse Operating Income Warehouse Net Cash 35,000 $65,000 $21,000 $ 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 05,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line ation will be used, and no residual value is expected. The committee has selected a rate of 12% for s of the net present value analysis. Present Value of $1 at Compound Interest Year 12% 15% 20% 10.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.68: d: 1a. Compute the average rate of return for each investment. If required, round your answer to one place. Investment Committee Average Rate of Return Robotic Assembler % Warehouse %…
please help, information technology project management Perform financial analysis for a project using the format provided in Figure 4-5 in your textbook (attached business_case_financials template). Assume that the project costs and benefits for this project are spread over four years as follows: Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years 2, 3, and 4. Use a 9 percent discount rate, and round the discount factors to two decimal places. Using the attached business case financials template, calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis. Business case financial spreadsheet and paragraph explaining your recommendations for investing or not in the project.
A company is looking at five different potential projects, but it can only do one of them. Which project should the company select? For this question, use the following information: Project A B D E Initial Investment -3,300 -6,500 -5,300 -7,000 -5,500 Annual Benefit 650 1,200 950 1,250 1,000 Salvage Value 150 425 300 1,000 200 Useful life 10 10 10 10 10 IRR 14.99% 13.51% 12.74% 13.26% 12.93% E-A C-A В-А D-A D-B Delta IRR 9.68% 8.88% 11.97% 11.78% 10.90% C-E B-E D-E В-С D-C Delta IRR 18.90% 16.44% 14.29% 16.79% 14.71% Which project should be selected if MARR is 10% (mutually exclusive)? D OA Oc OB

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