The following information is provided by Doppler Systems: Project A Project B Project C Project D Initial investment $440,000 $202,000 $550,000 $506,000 PV of cash inflows $570,000 $394,000 $816,000 $406,000 Payback period (years) 3.6 3.2 4.0 20 NPV of project $130,000 $192,000 $266,000 $100,000 Calculate the profitability index for Project A. (Round your answer to two decimal places 1.09 1.67 0.85 1.30

The following information is provided by Doppler Systems: Project A Project B Project C Project D Initial investment $440,000 $202,000 $550,000 $506,000 PV of cash inflows $570,000 $394,000 $816,000 $406,000 Payback period (years) 3.6 3.2 4.0 20 NPV of project $130,000 $192,000 $266,000 $100,000 Calculate the profitability index for Project A. (Round your answer to two decimal places 1.09 1.67 0.85 1.30

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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5.The following information is provided by Pemberton Systems: Project A $434,000 $572,000 3.6 Project B $200,000 $396,000 Project C Project D Initial investment PV of cash inflows $568,000 $510,000 $808,000 $402,000 4.0 Payback period (years) NPV of project 3.2 2.0 $138,000 $196,000 $240,000 $108,000 Which project has the highest profitability index?
You are given the following cash flow information for Project A TV Inflows Year 0 PV Outflows -$150,000.00 1 Project A -$150,000.00 $80,000.00 -$25,000.00 $50,000.00 2 $80,000.00 -$30,000.00 $75,000.00 Totals 3 4 5 6 O 19.33% $75,000.00 Now assume that the project's cost of capital is 16.0 percent, but that its true reinvestment rate is 24.0 percent. Given this information, determine the project's modified internal rate of return (MIRR). Ⓒ 18.56% 5 pts
All techniques with NPV profile-Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 12%. The cash flows for each project are shown in the following table: a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend. GICKER a. The payback period of project A is years. (Round to two decimal places.) The payback period of project B is years. (Round to two decimal places.) b. The NPV of project A is $. (Round to the nearest cent.) The NPV of project B is $. (Round to the nearest cent.) c. The IRR of project A is%. (Round to two decimal places.) The IRR of project B is%. (Round to two decimal places.) d. Which project will you recommend? (Select the best answer below.) OA. Project B OB. Project A
A Ld. is considering a Project having a life of 5 year with following cash flows Project I 30,000 Outfiow Inflow T-1 T-2 T-3 8,000 9.000 9,000 7,000 5,000 T-4 T-5 P.V. Table Year 20 833 10 26 794 30 356 909 326 796 J41 549 406 301 223 .694 630 592 455 .751 683 621 579 482 500 397 4. 350 402 315 269 Caleulate IRR of the above project.
The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) S (360,000) $ (480,000) Present value of cash inflows 336, 140 522,970 433, 400 567, 270 Net present value $ 66, 140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: Compute the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.
me IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: . The firm's cost of capital is 15%. Options a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Is project X acceptable on the basis of IRR? (Select the best answer below.) No O Yes The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Is project Y acceptable on the basis of IRR? (Select the best answer below.) O Yes Click to select your answer(s). O Type here to search
The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) $ (360,000) $ (480,000) Present value of cash inflows 336,140 522,970 433,400 567,270 Net present value $ 66,140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can’t accept all of the available projects. Required: I need help finding the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.
You are given the following cash flow information for Project A: Project A PV Outflows TV Inflows Year 0 -$150,000.00 1 $80,000.00 2 -$25,000.00 3 $50,000.00 4 $80,000.00 5 -$30,000.00 6 $75,000.00 -$150,000.00 $75,000.00 Totals Now assume that the project's cost of capital is 16.0 percent, but that its true reinvestment rate is 25.0 percent. Given this information, determine the difference between the project's net present value (NPV) and its modified net present value (MNPV). O $45,129.36 O $46,411.47 O $44,701.99 $45,556.73 $45,984.10
(A) Sunny Company is investigating four different opportunities. Information on the four projects under study is as follows: Project 1 2 34 Investment required $480,000 $360,000 $270,000 $450,000 Present value of cash inflows 567,270 433,400 336, 140 522,970 Net present value $87,270 $73, 400 $66, 140 $72,970 Life of project 6 years 12 years 6 years 3 years The company's required rate of return is 10%; therefore a 10% discount rate has been used in the present value computations above. Limited funds are available for investment, so the company cannot accept all of the available projects. Required: a) Compute the profitability index for each investment project. b) Rank the four projects according to preference, in terms of: (i) Net present value, (ii) Profitability index. (B) Snow Company is considering the purchase of a new piece of equipment for laying sod. Relevant information concerning the equipment follows: Cost of Equipment $ 180,000.00 Annual Cost saving from new equipement $37,…
All techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are shown in the following table a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project d. Indicate which project you would recommend years (Round to two decimal places.) a. The payback period of project A is The payback period of project B is years (Round to two decimal places.) b. The NPV of project A is $ The NPV of project B is $ c. The IRR of project A is The IRR of project B is 15.24% (Round to the nearest cent.) (Round to the nearest cent.) 15.92%. (Round to two decimal places.) (Round to two decimal places.) پہلے
Data pertaining to investment proposals is provided below: A B D -$40,000 $57,600 $17.600 Investment required -$260,000 $505,900 $245.900 -$125,000 -$640,000 $224,300 $99.300 6. Present vahue of cash inflows $1.021,400 NPV Usefil lfe of the project $381.400 6 Calculate project profitability index to rank proposals in tem of preference. Answer Choices: Project Investment profitability a. proposal Rank index preference 0.95 0.44 0.79 0.60 A 1st B 4th 2nd 3rd Project Investment profitability ь. proposal Rank preference 1.95 index A 1st B 1.44 4th 1.79 1.60 2nd D 3rd Project Investment profitability proposal Rank index preference 0.49 0.31 A 1st B 4th 0.44 2nd 0.37 3rd Project Investment profitability d. proposal Rank index preference A 1.45 1st B 0.94 4th 1.29 1.10 2nd 3rd D
Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects Project A Project B Useful life 5 years 5 years Present value of cash inflows $84,440 $53,300 Present value of cash outflows $79,000 $46,000 What is the present value index for Project A? Multiple Choice 1.069 0.862 1.097 0.886

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