
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The manager of a small firm wants to know which among the three different projects should the company enter into. Details of the three projects are as follows:
JOJO |
GINA |
MARIA |
LORINDA |
KANOR |
|
Initial investment |
P 120,000 |
P 125,000 |
P 180,000 |
P160,000 |
P35,000 |
|
25,000 |
24,000 |
45,000 |
35,000 |
10,000 |
|
10% |
15% |
12% |
8% |
9% |
Profitability index |
1.21 |
1.19 |
1.25 |
1.22 |
1.29 |
If the management has a budget of P500,000 only, which projects would be undertaken?
a. Jojo, Gina, Lorinda, and Kanor b. Gina, Maria, Lorinda, and Kanor c. Jojo, Maria, Lorinda, and Kanor d. Jojo, Gina, Maria, and Kanor |
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- 21arrow_forwardThe management of Bhytyu Limited are considering several mutually exclusive projects with characteristics as shown in the following table. Project A B C D E Initial Cost ($ millions) 87 121 91 95 118 Accounting rate of return 13% 13% 15% 22% 11% Net Present Value ($ millions) 0 11 -1 7 10 Payback Period (Years) 3 5 7 3 5 Internal Rate of Return 9.5% 13.2% 8.0% 11.7% 12.5% Management’s stated goal is to maximise the wealth of the firm’s owners, and to be accepted any investment project must have a minimum investment yield of 10%. Required: Which of the above projects, if any, should be selected by management? Explain the rationale for your choice.arrow_forwardQ3) Based on the information below which projects will we choose based on weighted average profitabiltity Index if we only have OMR500,000 to invest? Select one: Project NPV Investment PI A 130,000 200,000 B 241,250 225,000 C 294,250 275,000 D 262,000 250,000arrow_forward
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