Description Amount Sales $6,000,000 Net Operating Income $800,000 Average Operating Assets $10,000,000 A new project is available that is estimated to generate an additional $500,000 in sales with an additional $60,000 in income. The project would require an investment in additional equipment of $600,000. Using the original information (in the table) and this new project's information, what would the segment's new ROI be if the project is pursued? Profit Margin Asset Turnover ROI Based on the new ROI, would the company want to pursue the new project

How do you calculate net investment in working capital, net cash flows, present value of net cash flows, and NPV? WACC is 10.10%

Problem 2. Based on benefit to cost ratio, determine which project should be chosen. Please work out in excel spreadsheet.

Compute the NPV based on the following data             Life of project                10.00  year  Required Investment       500,000.00   Required Rate of Return   8%   Required Working Capital to be released at the end of the project       35,000.00   Salvage value of equipment at end of year 10       12,000.00   Required overhaul in year 5         60,000.00   Annual increase in net income for this project       85,000.00             Year Cash flow     0       1       2       3       4       5       6       7       8       9       10               Net Present Value       IRR             Should we accept this project:?

The senior management of Netherworld Ltd is evaluating four project proposals and will select one project to invest in. The following summary information is available: Project Code Initial Investment Required Net Present Value Project life (years) A 172,000 48,000 7 B 155,000 48,000 12 C 115,000 39,100 7 D 141,000 38,500 3   Required: Calculate the profitability index for each project. In order of preference, rank the four projects in terms of net present value and the profitability index. Which project do you think should be chosen?

Two mutually exclusive investment altematives for implementing an office automation plan in an engineering design firm are being considered. If the firm's MARR is 10% per year, which alternative should be selected? Compare the altematives shown below on the basis of Incremental Analysis. Investment A Investment B Capital Investment, S 920,000 660,000 Annual Expenses, S/ yr. 167,000 133,000 Salvage value, S 410,000 330,000 Life, years 10 10 Determine IRR on incremental analysis, using 7% and 13% rates. Oa.86% Ob 11.1% 10.9% Od.95%