"Mahnoor Traders" is considering to make investment in one of the two projects. The details of expected cash flows associated with projects are as follows: Project A ($) (1,500,000 +M) Project B ($) (1,800,000 +M) 550,000 Year 1 300,000 750,000 900,000 2 400,000 500,000 3 900,000 900,000 900,000 4 900,000 950,000 1,250,000 6. For students with last digit of Roll # as 7 to 9 M = 0 A. Requirement- A: Carryout analysis of the two projects using Payback Period technique and suggest which project should be selected. B. Requirement- B: Considering prevailing Rate of Return as 13%, carryout analysis of the two projects using NPV technique and suggest which project should be selected.

"Mahnoor Traders" is considering to make investment in one of the two projects. The details of expected cash flows associated with projects are as follows: Project A ($) (1,500,000 +M) Project B ($) (1,800,000 +M) 550,000 Year 1 300,000 750,000 900,000 2 400,000 500,000 3 900,000 900,000 900,000 4 900,000 950,000 1,250,000 6. For students with last digit of Roll # as 7 to 9 M = 0 A. Requirement- A: Carryout analysis of the two projects using Payback Period technique and suggest which project should be selected. B. Requirement- B: Considering prevailing Rate of Return as 13%, carryout analysis of the two projects using NPV technique and suggest which project should be selected.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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"Mahnoor Traders" is considering to make investment in one of the two projects. The details of expected cash flows associated with projects are as follows: Project A ($) (1,500,000 +M) 300,000 400,000 500,000 900,000 Year Project B ($) (1,800,000 +M) 550,000 750,000 900,000 1 2 3 4 900,000 900,000 950,000 1,250,000 6. 900,000 For students with last digit of Roll # as 0, 1, or 2 For students with last digit of Roll # as 3 to 6, For students with last digit of Roll # as 7 to 9 M = 100,000 М 3D 200,000 M = 0 A. Requirement- A: Carryout analysis of the two projects using Payback Period technique and suggest which project should be selected. B. Requirement- B: Considering prevailing Rate of Return as 13%, carryout analysis of the two projects using NPV technique and suggest which project should be selected.
Kikwetu Limited is considering investing in a project with the following expected cashflows: Year (C.F) 1 35,500 2 39,000 3 25,000 4 15,000 The cost of the project = Sh. 100,000 Compute the approximate profitability index of the project
Insigne Corporation is considering two investment projects (projects A and project B) that are mutually exclusive. Project A requires an initial cash out flow of $10,000,000 today and Project B requires an initial cash out flow of $15,000,000 today. The expected end-of-year cash inflows of each project are given in the following table: Year Cash Inflow project A Cash Inflow project B 1 3,500,000 7,500,000 2 6,000,000 8,000,000 3 6,000,000 4,000,000 4 9,000,000 4,500,000 Weighted average cost of capital is 13% for both projects. What is the IRR of each project? What is the NPV of each project? What is MIRR of each project? What is payback of each project? Which project should Insigne Corporation take? Please explain why
Kikwetu Limited is considering investing in a project with the following expected cashflows: Year (C.F) 1 35,500 2 39,000 3 25,000 4 15,000 The cost of the project = Sh. 100,000 Required: Compute the approximate profitability index of the project
The net cash flow per year for the investment projects A and B, is presented in the table below. Expected Net Cash Flow ($) Project 0 1 2 3 4 A -10,000 6500 3000 3000 1000 B -10,000 3500 3500 3500 3500 Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum acceptable rate of return of 8%. Which projects should be accepted if they are independent projects? Would the selection of the projects change if the cost of capital were 12%?
Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table Cash flows Project A Project B Project CInitial investment (CF0) $60,000 $100,000 $110,000Cash inflows (CFt), t = 1 to 5 $20,000 $ 31,500 $ 32,500 e. Calculate the internal rate of return (IRR) for each project. f. Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why.
The cash flows associated with an investment project are as follows: Project Y (200 000) 100 000 Year 100 000 120 000 110 000 The discount rate is 8 percent. What's the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI of a projects Calculate IRR of a projects Should the firm accept the project? a) b) c) d) 01234
Filter Corp. has a project available with the following cash flows: Year Cash Flow 0 −$15,900 1 5,300 2 6,600 3 6,000 4 4,400 What is the project's IRR?
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow -$ 148,000 68,000 71,000 55,000 1 2 what is the IRR for this project?
Two mutually exclusive investment projects have the following forecasted cash flows: a. Compute the internal rate of return for each project. b. Compute the net presnt value for each project if the firm has a 10 percent cost of capital. c. Which project should be adopted? Why? Year A B 0 -$20000 -$20000 1 +10000 0 2 +10000 0 3 +10000 0 4 +10000 +60000
17. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B)0 −$291,000 −$41,6001 37,000 20,0002 55,000 17,6003 55,000 17,2004 366,000 14,000 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
Two mutually exclusive investment projects have the following forecasted cash flows: Year A B 0 -$20,000 -$20,000 1 +11,000 0 2 +11,000 0 3 +11,000 0 4 +11,000 +55,000 Use Table II and Table IV to answer the questions. Compute the internal rate of return for each project. Round your answers to one decimal place.IRRA: % IRRB: % Compute the net present value for each project if the firm has a 10 percent cost of capital. Round your answers to the nearest dollar.NPVA: $ NPVB: $ Which project should be adopted? Why? should be chosen because it has the higher . It is assumed that the firm's reinvestment opportunities are more accurately represented by the .

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