The five alternatives shown here are being evaluated by the rate of return method: If thealternatives are independentand the MARR is 17% per year, which alternative(s) should beselected?ADEInitial Investment ($)-25,000-35,000-40,000-60,000-75,000i% (ROR versus DN)9.6%17.1%13.4%27.4%22.2%O a.A and CO b.O C.All of themO d.B. D, andEIncremental cash flow = cash flowB – cash flowA. where larger initial investment isENal!

Companies have different alternatives to invest their money in, but they should always compare the…

The five alternatives shown here are being evaluated by the rate of return method: If the alternatives are independentand the MARR is 17% per year, which alternative(s) should be selected? Initial Investment ($) -25,000 35,000 -40,000 -60,000 -75,000 i% (ROR versus DN) 9.6% 17.1% 13.4% 27.4% 22.2% O a. A and C O b. D O c. All of them d. B. D, and E

The five alternatives shown here are being evaluated by the rate of return method: If the alternatives are independentand the MARR is 17% per year, which alternative(s) should be selected? Initial Investment ($) -25,000 35,000 -40,000 -60,000 -75,000 i% (ROR versus DN) 9.6% 17.1% 13.4% 27.4% 22.2% O a. A and C O b. D O c. All of them d. B. D, and E

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 8P

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Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B C D E -25,000 -35,000 -40,000 -60,000 -75,000 A 9.6 27.3 9.4 35.3 25.0 15.1 38.5 24.4 C 13.4 46.5 27.3 D 25.4 6.8 E 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 20% per year, the best alternative is Select one: О а. В O b. C O c. D O d. E
Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B D - 25,000 - 35,000 - 40,000 -60,000 -75,000 9.6 27.3 9.4 35.3 25.0 В 15.1 38.5 24.4 13.4 46.5 27.3 - 25.4 6.8 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 5% per year, the best alternative is Select one: O a. E O b. A O c.D d. B ABCDE
The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E
Four alternatives (Alternatives A, B, C, and D) described below are being evaluated. Incremental Rate of Return, %, When Compared with Alternative B Alternative A B C D Initial Investment, $ - 30,000 - 71,000 - 95,000 - 110,000 Overall Rate of Return. % 16.9 15 17.5 10 A 18.7 19.2 16.7 15 C 10 1) A) If the alternatives are independent, which one(s) should be selected at a MARR of 15% per year? There is no budget limit. B) If the alternatives are mutually exclusive (ME), which one should be selected at a MARR of 17% per year? {Hint: Consider Do Nothing (DN)} 2) B/C Analysis - Single Project: Calculate the conventional B/C ratio for a county government project that is predicted to have the following cash flows: • Costs of $1,900,000 per year • Benefits of $2,100, 000 per year Disbenefits of $250,000 per year. Should the county government invest in that project? Please explain your answer. (meaning: explain why you think the government should or should not invest in the project). 3)…
Find the internal rate of return for the following investment (yes I want the actual rate). Is it a good idea if MARR=10%? Year -160,400 1 75,000 2 -32,000 3 55,000 4 32,500 5 69,500
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A project which requires an investment of OMR 18,000, duration of the project is 2 years, average net cash inflows were OMR 12,000 and annual variable cost is OMR 8,000. Assuming a discount rate at 12%, evaluate the sensitivity of Initial Investment influencing NPV with above information. Select one: O A. 11.25% B. 12.67% O C. 16.87% D. 6.75%
es Lopez Company is considering three alternative investment projects below: Project 1 5.2 years $ 26,700 Project 2 5.7 Years $ 33,700 14.2% 13.1% Payback period Net present value Internal rate of return a. Payback period b. Net present value c. Internal rate of return. Which project is preferred if management makes its decision based on (a) payback period, (b) net present value, and (c) internal rate of return? Preferred Investment Project 3 4.9 Years Reason $19,700 12.5%
Assume a project has cash flows of -$54,300, $18,200, $37,300, and $14,300 for Years 0 to 3, respectively. What is the profitability index given a required return of 12.6 percent? 1.02 .95 .98 1.06 ☐ 1.00
Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months and days). 5.2 Net Present Value of Project Tan.5.3 Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). INFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you: PROJECT COS PROJECT TANNet Profit Net ProfitYear R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculatedusing the straight-line method.
For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order of alternatives from least capital investment to greatest capital investment is Do Nothing → A → C → B. Complete the IRR analysis by selecting the preferred alternative. The IRR of A (C→ B) is%. (Round to one decimal place.) A Capital investment A Annual revenues A Annual costs A Market value A IRR Do Nothing → A - $15,000 4,000 - 1,000 6,000 12.7% A → C - $2,000 900 -150 -2,220 10.5% C → B -$3.500 460 -75 3.500 ???