EOY A001 B002 C003 -$210 -$110 -$160 1 $80 $60 $80 $90 $60 $80 3 $100 $60 $80 $110 $70 $80 2. 4-

Adam Andler Corp is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years. This is just one of many projects for the firm, so any losses on this project can be used to offset gains on other firm projects. What is the project's expected NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC or cost of capital Net investment cost (depreciable basis) The salvage value of its equipment No other fixed assets will be acquired for following years The company will require an increase in net working capital at the $10,000 beginning The company will liquidate all working capital at the end of the project -10,000 Units sold (constant through years) 60,000 $30.00 $50,000 $17.00 Average price per unit, Year 1 Fixed operating…

Project Analysis. Assume that you are evaluating the following three mutually exclusive projects: A. Complete the following analyses. (For the last two lines, Terminal Value, please write in the dollar amount of the terminal value.) B. Compare and explain the conflicting rankings of the NPVs and TRRs versus the IRRs. C. Using different discount rates, is it possible to get different rankings within the NPV calculation? Why or why not? D. If 10 percent is the required return, which project is preferred? E. Which is the fairer representation of these two projects, TRR or IRR? Why?  

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Consider these mutually exclusive alternatives. MARR = 8% per year, so all the alternatives are acceptable. Solve, a. At the end of their useful lives, alternatives A and C will be replaced with identical replacements (the repeatability assumption) so that a 20-year service requirement (study period) is met. Which alternative should be chosen and why? b. Now suppose that at the end of their useful lives, alternatives A and C will be replaced with replacement alternatives having an 8% internal rate of return. Which alternative should be chosen and why?

Given mutually exclusive projects, which project should be selected given the MARR - 9%? Note that the actual rate of return for each of the project is greater than or equal to the MARR. The notation shows the project with the higher first cost minus the project with the lower first cost. (i.e. Ain-A = 8.2%neans that Project B has the higher first cost). The projects in order of smallest to largest first costs are Project A, then Project B and lastly Project C. Ain-A = 8.2% Aic-A = 10.1% Aie u = 10.5% O Project A O Project 8 O Project C

You are analyzing a project with an initial cost of 130,000 pounds. The project is expected to return 20,000 pound the first year, 50,000 pound the second year, and 90,000 pound the third year. there is no salvage value. the current spot rate is 0.6211 pound. The nominal risk-free rate of return is 5.5% in the UK and 6% in the US. The return relevant to the project is 14% in the US. Assume that uncovered interest rate parity exists. What is the NPV of this project in US dollars using the approximate formula?