Rundle Delivery is a small company that transports business packages between New York and Chicago. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. Rundle Delivery recently acquired approximately $5.5 million of cash capital from its owners, and its president, George Hay, is trying to identify the most profitable way to invest these funds. Todd Payne, the company's operations manager, believes that the money should be used to expand the fleet of city vans at a cost of $720,000. He argues that more vans would enable the company to expand its services into new markets, thereby increasing the revenue base. More specifically, he expects cash inflows to increase by $320,000 per year. The additional vans are expected to have an average useful life of four years and a combined salvage value of $106,000. Operating the vans will require additional working capital of $43,000, which will be recovered at the end of the fourth year. In contrast, Oscar Vance, the company's chief accountant, believes that the funds should be used to purchase large trucks to deliver the packages between the depots in the two cities. The conversion process would produce continuing improvement in operating savings and reduce cash outflows as follows. Year 1 Year 4 Year 2 Year 3 $151,000 $317,000 $408,000 $433,000 The large trucks are expected addition to the purchase price of the trucks, up-front training costs are expected to amount to $17,000. Rundle Delivery's management has established a 8 percent desired rate of return. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) $800,000 and to have a ur-year useful life and a $83,000 salvage value. In Required a.&b. Determine the net present value and present value index for each investment alternative. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answer in whole dollars and not in millions.) Purchase of Purchase of City Vans Trucks Net Present Value a. (NPV) Present Value Index b. |(PVI)

Mr. Martínez is the owner of a company dedicated to the production of renewable energy. Nowadays, his business has good cash flows due to the increase in demand in this area. However, to be more competitive he needs cost efficiency with his suppliers. The average financing need ranges between $600,000 and $1,200,000 pesos per year. The following is requested: 1. Introduction, that is, what is expected with the resolution of this exercise. 2. Define first what is the need to solve. 3. Investigate the options offered by financial institutions.

Zeven Properties Limited (‘ZPL’) is a housebuilding contractor based in England specialising in building affordable private housing. ZPL’s shares are floated on the London Stock Exchange and are currently priced at £5 per share. The Board of Directors is planning an expansion, which will involve raising £10 million but has not decided on what form of finance should be raised. The Board is considering either a bank loan from the company’s existing bank (the Bank of Alba) or an equity investment from new shareholders.   On a completely different topic, at a recent Board meeting one of the non-executive directors suggested that ZPL’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non-executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the…

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