Solaris Inc. is evaluating three projects: Alpha, Beta, and Gamma. • Alpha requires an investment of $50,000 and has a net present value (NPV) of $7,500. Beta requires $65,000 and has an NPV of $6,500. Gamma requires $80,000 and has an NPV of $10,400. Using the profitability index, rank the projects from most to least desirable. a. Alpha, Gamma, Beta b. Gamma, Alpha, Beta c. Alpha, Beta, Gamma d. Gamma, Beta, Alpha

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?

Consider the following projects, X and Y where the firm can only choose one. Project X costs $1500 and has cash flows of $678, $652, $347, $111, $54, $16 in each of the next 6 years. Project Y also costs $1500, and generates cash flows of $738, $693, $405 for the next 3 years, respectively. WACC=11%.Plot NPV profiles for the two projects. Identify the projects’ IRRs on the graph.

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You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze six proposed capital investments. Each project has a cost of $1,000, and the required rate of return for each is 12%, determine for each project (a) the payback period, (b) the net present value, (c) the profitability index, and (d) the internal rate of return. Assume under MACRS the asset falls in the three-year property class and that the corporate tax rate is 25 percent. You are limited to a maximum expenditure of $3000 only for this capital budgeting period. Which projects you will accept and why? Justify your suggestions Project A Project B Project C Project D Project E Project F Investment -1000 -1000 -1000 -1000 -1000 -1000 1 150 200 250 800 900 1000 2 350 300 250 350 300 200 3 400 500 600 200 150 100 4 700 650 600 200 150 50 12 Capital Budgeting and Estimating Cash Flows Table 12.2 PROPERTY CLASS RECOVERY YEAR MACRS depreciation percentages 3-YEAR 5-YEAR 7-YEAR 10-YEAR…

You have been assigned to perform a project selection based on profitability index. You have collected data on the three project alternatives A1, A2, and A3 and your team has calculated the following (table) present worth equivalent for the benefits, costs, and investments at a social discount rate of 10%. The service life of each alternative is identical. (a) Find the PI(i) for each project alternative (b) Find the best alternative based on incremental PI(i) analysis (c) Why is the profitability index referred to as a measure of capital efficiency?

Do the following problems. You must show your work.c) Find the IRR and MIRR of the following project and make your decision. Assume that the project's cost of capital (or WACC) is 4%. Project X that costs $30 million is expected to generate $13m per year for 3 years. Is this project acceptable?

Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.   project 1 project 2 initial investment $(510,000) $(685,000) cash flow year 1 485,000 610,000 Compute the following for each project:   NPV (net present value) PI (profitability index) IRR (internal rate of return)   Based on your analysis, answer the following questions :   Which is the best choice? Why? Which project should be selected and why? If the projects had the same IRR amounts but different NPV totals, then how would you know which project to select? Explain.

A project has initial costs of $3,000 and subsequent cash inflows of $1350,275,875 and 1525 . The company's 10% cost of capital is an appropriate discount rate for this average risk project. Calculate the following: NPV IRR Profitability Index Please number/label each of your answers as shown above. Be sure to show your TVM function calculator inputs, and four decimal places.

Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Which investment should the firm choose if the cost of capital is 15 percent?     Project X, since it has a higher NPV than Project Y     Project Y, since it has a higher NPV than Project X     neither, since both the projects have negative NPV     neither, since both the projects have positive NPV