Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 2 projects. Projects 4 and 5 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution. Project Cost Net Present Value $260,000 000 , 20ר$ $590,000 $570,000 2. $210,000 $235,000 $215,000 3 $470,000 $220,000 $490,000 Which projects should be selected? Project 1 will Project 2 will Project 3 will Project 4 will Project 5 will

Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 2 projects. Projects 4 and 5 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution. Project Cost Net Present Value $260,000 000 , 20ר$ $590,000 $570,000 2. $210,000 $235,000 $215,000 3 $470,000 $220,000 $490,000 Which projects should be selected? Project 1 will Project 2 will Project 3 will Project 4 will Project 5 will

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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Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 2 projects. Projects 4 and 5 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution. Project Cost Net Present Value $260,000 $210,000 $720,000 $590,000 2 $570,000 $470,000 $235,000 $215,000 $220,000 $490,000 Which projects should be selected? Project 1 will Project 2 will Project 3 will Project 4 will Project 5 will What is the total net present value of these projects? Total net present value
Consider the following information about a project: PROJECT YEAR O YEAR 1 YEAR 2 YEAR 3 YEAR 4 COSTS $160,000 $43,000 $50,000 $50,000 $64,000 BENEFITS $0 $400,000 $400, 000 $500,000 $500,000 a) Calculate the NPV assuming 10% discount rate b) Determine in which year will be the payback c) Calculate (ROI)? Provide the detail answer for your calculation.
You have made the followed calculation for your client. You must make a decision concerning the project they can take with a budget of 190 Million €. You know the pros and cons of each rule, and you try to make the best decision by comparing the results. Comment the table and explain your decisions Required PV NPV IRR PI Investment Project 1 Project 2 Project 3 Project 4 Project 5 -110.00 0.15 209.44 4.16 0.17 0.038 - 80.00 0.06 153.68 39.77 0.30 0.497 - 70.00 0.10 151.30 27.90 0.30 0.399 - 90.00 0.08 156.92 19.70 0.18 0.219 - 50.00 0.25 252.59 25.04 0.51 0.501
Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Alpha Year Inflow YO 0 Y1 0 Outflow 207,000 110,000 Netflow Year Inflow Outflow Netflow (207,000) YO 0 217,000 (217,000) (110,000) Y1 7,000 190,000 (183,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 161,000 0 161,000 Y4 191,000 0 191,000 Y5 205,000 48,000 157,000 Y5 205,000 38,000 167,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,033,000 425,000 608,000 Total 1,070,000 505,000 565,000 The NPV for Omega is The NPV for Alpha is The better project is
You are evaluating the following two mutually exclusive projects: Project Year 0 Year 1 Year 2 A -$100 $95 $140 B -$50 $50 $120 Both have 15% cost of capital. Using NPV profiles for Projects A and B, determine which project would be chosen under each of IRR rule and NPV rule. (Hint: Draw the NPV profiles.) Group of answer choices A under IRR rule, and B under NPV rule B under IRR rule, and A under NPV rule A under both IRR and NPV rules Cannot be determined. B under both IRR and NPV rules
You are considering the following two projects for investment: Project A Project B Year 0 ($10000) ($5000) Year 1 $3000 $3000 Year 2 $7000 $4000 Year 3 $9000 $5000 You must conduct an analysis using your knowledge of capital budgeting (NPV, IRR ect, ) and time value of money to decide which of the options is better. All analysis must be done in Excel. (This will require all calculations to be done using cell references and excel functions). Your analysis will require you to: A. Calculate thefollowing values for the investment proposals: i. The payback period assuming end-of-the-year cash flows. ii. The discounted payback period assuming a required rate of return of 10% and ending of-the-year cash flows. iii. The NPV of each project. iv. The PI of each…
The net present value of four projects is given below: Project W: $24,000 Project X: $ 11,000 Project Y: $20,000 Project Z: $14,000 The four projects given above require the same amount of investment. How would you rank them using net present value (NPV) method? Group of answer choices X, Z, Y, W W, X, Y, Z W, Y, Z, XX, Y, Z, W
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
Suppose that you could invest in the following projects but have only $24,480 to invest. Which projects would you choose? Project Cost NPV w $ 7,970 $ 3,000 x 10,990 7,530 y 8,500 4,280 z 6,750 3,890 You should invest in project(s)?
31 Note: This problem requires the use of a linear programming application such as Solver or Analytic Solver. Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least two projects. If project 1 is chosen then project 2 cannot be selected. Formulate the problem as a linear program and determine the optimal solution. Project 1 2 345 Cost $250,000 $500,000 $290,000 $650,000 $750,000 Multiple Choice Net Present Value $500,000 $750,000 $333,000 $400,000 $600,000 O Project 1 and project 2
Q.2. For an investor with a minimum rate of return of 8.0%: a) Rank the following non-mutually exclusive alternative. b) For a time zero budget of $1,400, which of the projects would you select? Use NPV, GRR and PI analysis. Year 0 1 2 3 4 Project A -$200 $75 $75 $75 $75 Project B -$450 $155 $155 $155 $155 Project C -$700 $250 $250 $250 $250 Project D -$950 $380 $330 $280 $230
Calculate the profitability index for the below projects and indicate your order of choices. Project Present Value Investment A $145,000 $95,000 $135,000 $80,000 $175,000 $110,000 Select one: a. B, A and C b. A, C and B c. B, C and A d. C, B and A B с

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