Abys company is considering a project that has values of benefits and costs at constant prices of 100000 and 60000. The discount rate being 6% and life span is 5 years. Estimate the Net Present Value and advise whether this project is feasible.
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Abys company is considering a project that has values of benefits and costs at constant prices of 100000 and 60000. The discount rate being 6% and life span is 5 years. Estimate the
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- Suppose a project with a 6% discount rate yields R5000 for the next three years. Annual operating costs amount to R1000 for each year, and the one time initial investment cost is R8000. a. Calculate the Net Present Value (NPV) of this project.b. Calculate the cost-benefit ratio for the project. c. Is the project acceptable? Motivate your answer.ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NP of the assembler if the required rate of return is 12%. Show calculation. Would you accept/reject a project based on NPV decision criteria? Why? Based on NPV calculated in part A, determine Profitability Index (PI). Show calculation. Would you accept/reject a project based on PI decision criteria? Why?Assume that it costs $1000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year. Find the pay back period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitability index (PI) for this project
- You are evaluating a project that costs $75,000 today. The project has an inflow of $ 155,000 in one year and an outflow of $65,000 in two years. What are the IRRs for the project? What discount rate results in the maximum NPV for this project? How can you determine that this is the maximum NPV?Assume that it costs $1,000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year. find the payback period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitability index (PI) for this projectAssume the following facts: A project will cost RM45 000 to develop. When the system becomes operational, after a one-year development period, operational costs will be RM9000 during each year of the system’s five year useful life. The system will produce benefits of RM30 000 in the first year of operation, and this figure will increase by 10% each year. When is the payback period for this project? Using the same facts, what is the ROI for this project? Using the same facts, what is the NPV for this project? (*Assuming 12% rate)
- 2. A potential software project will cost $17000 now, $2000 one year from now, $1000 2 years from now, and $1000 3 years from now. It will provide benefits of $28000 after it is installed 1 year from now, $30000 2 years from now, and $35000 3 years from now. Calculate the Present Value of the costs and benefits for each year and the overall Net Present Value of the project. Use a discount rate of 3%. (Hint: set up a spreadsheet...) Year 0 SO ? Benefits PV of Benefits Costs PV of Costs ? $17,000 Year 1 $28,000 ? Show Transcribed Text $2,000 ? Year 2 $30,000 ? $1,000 ? Year 3 $35,000 ? $1,000 ? Net Present Value (NPV) = Total PV of Benefits - Total PV of Costs Total Benefits Total Costs 3. The Payback Period is the length of time required to recover the cost of an investment. Management uses Payback Period to assess the risk of an investment - the longer the Payback Period, the higher the investment risk. What is the Payback Period for the project in question #2 above? 4. What is the ROI…firm is considering the launch of a new product, the XJ5. The upfront development cost is $ 8 million, and you expect to earn a cash flow of $ 2.9 million per year for the next 5 years. Create a table for the NPV profile for this project for discount rates ranging from 0 % to 30 % (in intervals of 5 %).For which discount rates is the project attractive?Your firm is considering the launch of a new product, the XJ5. The upfront development cost is $10 million, and you expect to earn a cash flow of $3.1 million per year for the next 5 years. Create a table for the NPV profile for this project for discount rates ranging from 0% to 30% (in intervals of 5%). For which discount rates is the project attractive? The NPV for a discount rate of 0% is $1.751 million. (Round to three decimal places.)
- Assume that it costs $1000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year, find the pay back period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitable index (PI) for this project.Brown Company is considering purchasing a machine that would cost $320,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $50,000. The machine would provide annual cost savings of $75,000. The company requires a rate of return of 11% on all investment projects. What is the net present value of the proposed project? (Select the answer that is closest to your calculations.) Present value tables are provided below. Present Value of $1 Table (Exhibit 11B-1) (Partial table) Periods 4% 5% 6% 7% 8% 9% 10% 11 12% 13% 14% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 1 2. 4 5. 6 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.760 0.711 0.665 0.623…Suppose you are considering a project has an initial cost of $500 that has an ongoing benefit of $250. Further, there is an ongoing cost that is equal to $90, which increases by 10% each year (compounding). Assume the project lasts 6 years. If the appropriate discount rate is 6%. Calculate: a) the Net Present Value = $Blank 1 b) the Benefit Cost Ratio = Blank 2 c) should the project be accepted or rejected? Explain your answer using the information from part a) and b). Answer =Blank 3 (accept/reject) Provide your answers to two decimal places. Do not include any commas (,) "$" or "%" in your answers. Ensure you show all your working in your spreadsheet.