HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / month/compounded quarterlyand 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives:ProjectHD131,000First ContMonthly contannual Income111.0006,300$4.0005.00089,0004,1004,20054,80053,600$1,900Income every years12.50013,10011,00010.200(a) PW for project A:Q.C.is every(b) PW comparison If they are Independent: TakeProjectFirst CostOC-IncomeIncome everyCompare toEquation: PWTake projectPW-HW-Chp-8-1-continued.:(b) PW comparison If they are mutually exclusive: Take onlyProjectFirst CastO.CIncomeIncome everyCompare toIncr.F.C.Inc.O.C.Incr. IncomeIncr.lac. everyEquation: PW-Take project HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / month/compounded quarterlyand 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives:ProjectHD131,000First ContMonthly contannual Income111.0006,300$4.0005.00089,0004,1004,20054,80053,600$1,900Income every years12.50013,10011,00010.200(a) PW for project A:Q.C.is every(b) PW comparison If they are Independent: TakeProjectFirst CostOC-IncomeIncome everyCompare toEquation: PWTake projectPW-HW-Chp-8-1-continued.:(b) PW comparison If they are mutually exclusive: Take onlyProjectFirst CastO.CIncomeIncome everyCompare toIncr.F.C.Inc.O.C.Incr. IncomeIncr.lac. everyEquation: PW-Take project

Capital budgeting is the process by which a corporation examines potential large projects or…

HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded quarterly and 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives: D A 111.000 6.300 First Cant Monthly c $1,000 $4000 5.000 131,000 4,200 4.100 54.800 $3,000 $1,900 Income every years 12.500 13,100 11,000 10.200 (a) PW for project A: E.C. Q.C (b) PW comparison If they are Independent: Take Project Find Cat Income every Compare to Equation: PW- Take project PW- HW-Chp-8-1-continued :(b) PW comparison If they are mutually exclusive: Take only Project First C O.C. Income every Compart Iner.F..C. Incr .O.C. Incr. Inc. every Equation: P Take project

HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / monthicompounded quarterly and 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives: D A 111.000 6.300 First Cant Monthly c $1,000 $4000 5.000 131,000 4,200 4.100 54.800 $3,000 $1,900 Income every years 12.500 13,100 11,000 10.200 (a) PW for project A: E.C. Q.C (b) PW comparison If they are Independent: Take Project Find Cat Income every Compare to Equation: PW- Take project PW- HW-Chp-8-1-continued :(b) PW comparison If they are mutually exclusive: Take only Project First C O.C. Income every Compart Iner.F..C. Incr .O.C. Incr. Inc. every Equation: P Take project

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 2P

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A company is considering two projects. The discount rate is 10 percent, and the projects’ cash flows would be: Years 0 1 2 3 Project A -$700 $500 $300 $100 Project B -$700 $100 $300 $600 Calculate the projects’ NPVs and IRRs. Project (A): NPV= =777.61-700=77.61 IRR= =18.005% Project (B): NPV= =789.63-700=89.63 IRR= =15.559% If the two projects are independent, which project(s) should be chosen? If the two projects are mutually exclusive, which project should be chosen?
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Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 11 percent. Year 0 12345 Project F $129,000 63,000 47,000 57,000 52,000 47,000 Project G $199,000 43,000 58,000 87,000 117,000 132,000
Consider a project with the following information: Year 1 2 3 4 5 6 Initial outlay= $950,000 Compute the NPV if the company's discount rate is 10%. 1) $268,244 2) $201,650 3) $213,050 $129 After-tax cash flows $300,000 $400,000 $400,000 $200,000 $150,000 $150,000
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You are considering a five-year project with initial investment of $40,446.46. The required return is 9%.The following are the estimates which are the same for each of the five-year period. Upper Bound 3,400 $22 $14 Base Case Unit sales Salea prise Variable ocst par onif Fized oosts 3,100 $19 $12 Lower Bound 2,500 $16 $10 $8,200 $7,800 $8,500 The depreciation is $7,600 a year and the tax rate is 34%. Assume operating cash flows (OCF) are the only incremental cash flows of the project. a) Conduct a sensitivity analysis to compare the base and the worst case of the unit sales to investigate the effect on OCF and NPV. b) Explain if you want to forgo this project based on sensitivity analysis.
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1. Assuming monetary benefits of a construction project at $50,000 per year during year 1, 2, 3 and 5 (not year 4), one-time costs (initial investment) of $15,000, recurring costs of $35,000 per year (every year), a discount rate of 10 per cent, and a 5-year time horizon, calculate the net present value (NPV) of an information system's costs and benefits. Calculate the overall return on investment (ROI) of the project. During which year does break-even occur?. Use the NPV template provided (modify to suit your answer) and clearly display the NPV, ROI, and year in which payback occurs. Write a paragraph explaining whether you would recommend investing in this project based on your ﬁnancial analysis. Explain your answer referring to the NPV, ROI and payback for this project. Discount Rate (10%) Year 0 - 1.0000 Year 1 - .9091 Year 2 - .8264 Year 3 - .7513 Year 4 - .6830 Year 5 - .6209
A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows would be: 01 2 3 Years Project A -$700 $500 $300 $100 Project B -$700 $100 | $300 $600 a. Calculate the projects’ NPVS. b. If the two projects are independent, which project(s) should be chosen? c. If the two projects are mutually exclusive, which project should-be chosen?