a) What are the IRRs of these two projects? (Use the formula provided in the appendix) b) If you are told only the IRRs of the projects, which would you choose? c) What did you ignore when you made your decision in part (b)?
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- Suppose you would like to invest your money for your future. You have three choices of funding agencies namely, FA 1, FA 2, and FA 3. Based on the given data below, compute for the future interest of each funding agency. What would you choose? Explain your answer. (Kindly explain your answer and put a step-by-step formula. I can't understand excel)You are a project manager for your company and you are faced with five potential projects that you can invest in. Free cash flow projections and additional relevant data are given for each project in the table below. Assume that there are no cash flows after year 3. Assume that you can only take each project once and that you can only choose one project. Which project would you invest in? Select the best answer. Project Project A Project B Project C Project D Project E O I. Project A II. Project B III. Project C IV. Project D O V. Project E FCF Forecasts by Year (in $1,000) 0 2 1 500 (400) (400) (300) (250) (300) 75 60 75 135 115 175 3 650 210 190 200 Interest Rate (EAR) 8.0% 10.0% 10.0% 12.0% 12.0% IRR 25.00% 17.57% 15.92% 17.81% 19.96%A company is considering three alternative Investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Complete this question by entering your answers in the tabs below. a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will It accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Required A Required B Compute the net present value of each project. Potential Projects Project A Present value of net cash flows Initial investment Net present value Required C Project E Project C $10,685 (10,000)
- Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. QUESTION) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places). INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest inone of them. You are given the following projected data:Project A Project BInitial cost R300 000 R300 000Scrap value R40 000 0Depreciation per year R52 000 R60 000Net profitYear 1 R20 000Year 2 R30 000Year 3 R50 000Year 4 R60 000Year 5 R10 000Net cash flowsYear 1 R90 000Year 2 R90 000Year 3 R90 000Year 4 R90 000Year 5 R90 000 Additional informationThe discount rate used by the company is 12%. Transcribed Image Text:Number of Periods 1 2 3 4 5 6 7 8 m 10 11 12 13 14 15 1% 2% 0.9901 0.9804 0.9709 3% 3.9020 3.8077…Suppose you would like to invest your money for your future. You have threechoices of funding agencies namely, FA 1, FA 2, and FA 3. Based on the givendata below, compute for the future interest of each funding agency. What would you choose? Explain your answer.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
- Direction: Solve what is being asked and show your complete and neat solution. (ROUND OF PV FACTORS TO 4 DECIMAL PLACES, ROUND OF FINAL ANSWER TO TWO DECIMAL PLACES. IN MCQs CHOOSE THE BEST ANSWER) D.) The frequency of spending or the rate or turnover of money a. Demand for money b. Velocity of money c. Transaction demand d. Speculative demand E.) Is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. a. Annuity b. Demand c. Speculation d. InvestmentYou are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 4.7%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 Project A Year 1 - -$51 $27 B - $101 $22 Year 2 $21 $42 Year 3 $20 Year 4 $13 $51 $59 - ☑A financial analyst is evaluating the following projects, which are mutually exclusive, meaning that only one of them can be chosen. Based on financial theory and the NPV criterion, which one of these projects should be chosen over the other three? Time A C D -26,000 -7,200 -14,500 -19,600 8,100 11,900 8,100 2,360 8.600 1,150 10,000 2,120 5,700 800 11,100 11,00O0 4,200 850 1,130 9,800 12,480 9,700 830 11,600 Discount 13.9% 13.9% 13.9% 13.9% Rate O Project A O Project B O Project C O Project D O12 345
- Which one of these statements is correct? Accountants record sales and expenses after the related cash flows occur. The value of an investment depends on the size, timing, and risk of the investment's cash flows. Individuals tend to prefer later cash flows over current cash flows. When selecting one of two projects, managers should select the project with the higher total expected cash flow Most investors prefer greater risk over less risk.The CEO asked you to take charge of the following projects for the company. However, he told you that because of the limited funds available, you have to pursue the projects one at a time. Using the profitability index, decide on which of the projects you are going to accomplish first, second, and third. Project 1 requires an initial investment of P500,000, will provide future cash inflow of P1,300,000, and present value of the future cash inflow of P850,000. Project 2 requires an initial investment of P1,000,000, will provide future cash flow of P3,000,000, and present value of the future cash flow is P1,550,000 Project 3 requires an initial investment of P1,500,000, will provide future cash flow of P5,000,000 and the present value of the future cash flow is P2,835,000.hi there tutors! im here to cure my doubts. i hv just a few subs to ask. please help solve. fundamentals of finance Required: Assuming the projects are mutually exclusive, determine the investment decisions through the appraisal methods below (state formula for each then calculate):a) Net present valueb) Payback period thats all. tutor, i hope for a correct & precise calculations. thanks tutor!