zechwan Gardens, Inc. has been thinking about further expansion of thebusiness. They have $40,000 available to spend. If the required rate of returnis 9%, which of the following should be selected for investment? Assume thatall options have a 7-year life and a PW analysis is preferred.
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Szechwan Gardens, Inc. has been thinking about further expansion of thebusiness. They have $40,000 available to spend. If the required rate of returnis 9%, which of the following should be selected for investment? Assume thatall options have a 7-year life and a PW analysis is preferred.
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- A company has to select one of the following two projects: Project A 25,000 Project B 23,000 Cost Cash Inflows: Year 1 15.000 5,000 3,000 12.000 3,000 4,000 3,000 20,000 Year 2 Year 3 Year 4 1. Using the Internal Rate of Retum method suggest which is Preferable. 2. Show your Solution. 3. Defend your answer.In-store branch at Lily location In-store branch at Daisy location Existing facilities Return 15.00% 15.50% 12.00 Deviation 6.50% 7.50% 5.00 Other Services 0.5 0.3 Total Assets 5.00% 5.00 95.00 6. First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $37,000 apiece. Installation costs will amount to about $15,000 per machine. Each machine has a projected useful life of 10 years. Due to rapid growth in the Southside district, these two machines are expected to handle 50,000 cash transactions per year. On average, each cash transac- tion is expected to save 30 cents in teller expenses. If First National has a 10 percent cost of capital, should the bank proceed with this investment project?Project A has the following information: Year 0 1 2 3 4 5 Initial investment outlay 125,000 Cash inflows 75,000 80,000 95,000 95,000 86,250 Personnel expenses 22,500 22,500 22,500 22,500 22,500 Material expesnes 15,000 20,000 22,500 22,500 22,500 Maintenance expenses 2,500 2,500 5,000 8,750 10,000 Other cash outflows 3,750 3,750 3,750 5,000 5,625 Liquidation value 12,500 Project B has the following information: Year 0 1 2 3 4 5 Initial investment outlay 225,000 Cash inflows 155,000 140,000 108,750 93,750 125,000 Personnel expenses 27,500 27,500 27,500 27,500 27,500 Material expenses 25,000 22,500 22,500 22,500 24,000 Maintenance expesnses 8,750 11,250 17,500 15,000 14,000 Other cash outflows 6,250 3,750 3,750 3,750 4,000 Liquidation value 15,000 The Discount Rate is 8%Assess the relative profitability of the two options using the following methods:(i) The Annuity Method(ii) The Net…
- A bookstore is planning to purchase an automated inventory/remote marketing system, which includes an upgrade to a more sophisticated cash register system. The package has an initial investment cost of $360,000. It is expected to generate $144,000 of annual cash flows, reduce costs and provide incremental cash revenues of $326,000, and incur incremental cash expenses of $200,000 annually. What is the payback period and accounting rate of return (ARR)?Spreadsheet Link What is the IRR of the following project? Cash Flow Year 0 32.000 9,000 1. 2 10,000 15,200 7,800 4. 1) 10.8% 2) 11.2% • 3) 11.7% 4) 12.0% 5) 12.3% 234T Normal T No Spac... Heading 1 Heading 2 Title Subtītle Paragraph Styles with an investment of OMR 100,000. She has provided the following information about two possible locations to start the supermarket. Her family had advised to accept the project which recovers the funds within 3 years Particulars Initial Investment Supermarket at Maabela Supermarket at Al Ansab 100,000 OMR 10% 100,000 OMR Cost of capital 12% Year 1 60,000 40,000 20,000 40,000 Year 2 50,000 Year 3 40,000 Evaluate the above offers using the investment evaluation techniques mentioned below without using Excel and mentioning the steps.: All calculations steps are to be provided a- Pay-back period b- Discounted Pay-back period C- Internal Rate of Return (IRR) d- Modified Internal Rate of Return (MIRR) e- Critically review the literature related to the above Investment appraisal techniques by highlighting THREE features about each technique used above. The discussion must be appropriately cited and referenced from…
- What is the net expected value of starting a loyalty card program after subtracting the program's start-up costs? $540,000 $940,000 $1,400,000 $1,800,000the revenues and costs associated with the opening of a new branch in the A. Branch sales 248000 Branch contribution margin % 25 Annual rent cost 10475 Other branch direct costs 5422.5 Branch fit out costs 7175 Allocated head office costs 1,1099 If the A branch opens, annual sales of the B branch will fall by 9%. If the A branch does not open, sales at the B branch will fall by 3%. The annual sales at the B branch are $3,844,100. Determine any incremental benefit from opening the A branch. $ Contribution Rent Other direct costs Fit out costs Head office costs Opportunity cost Incremental benefitA company is considering two projects. Project I Project II Initial investment $120,000 $120,000 Cash inflow Year 1 $40,000 $20,000 Cash inflow Year 2 $40,000 $20,000 Cash inflow Year 3 $40,000 $32,000 Cash inflow Year 4 $40,000 $48,000 Cash inflow Year 5 $40,000 $50,000 What is the payback period for Project I? a.5 years b.3.5 years c.2.5 years d.1 year e.3 years
- PROGRAMS SELF DEVELOPMENT E-LIBRARY 8. 6. 10 11 12 13 14 15 16 Your company wants to invest JD 10,000,000 in network, taking into consideration the below table Investment 10,000,000.00 Lifetime Annual Revenues in Yearl 2,000,000.00 2% Annual decline in revenues from Y2 30% Direct Cost % of revenues 15% OPEX % of revenues 7% Interest Discount rate/fWACC) COAll techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are shown in the following table a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project d. Indicate which project you would recommend years (Round to two decimal places.) a. The payback period of project A is The payback period of project B is years (Round to two decimal places.) b. The NPV of project A is $ The NPV of project B is $ c. The IRR of project A is The IRR of project B is 15.24% (Round to the nearest cent.) (Round to the nearest cent.) 15.92%. (Round to two decimal places.) (Round to two decimal places.) پہلےThe production department is proposing the purchase of an automatic insertion machine. It has asked the accountant to analyze them to determine the best cash payback. Machine A Machine B Machine C Annual cash flow Average investment $40,000 $50,000 $75,000 $300,000 $250,000 $500,000 Oa. Machine B Ob. Machine C Oc. Machine A Od. All of these choices are equal.