UTCM's Knowledge and Communication Services Centre (KCSC) is considering two proposals to overhaul its network system and infrastructure. They have received two proposals as shown in Figures la and 1b. Analyze which proposal has the best return on investment for 6 years 50,000 50,000 50,000 40,000 100,000 70,000 12% per year compounded yearly 30,000 30,000 20,000 Figure la: Proposal 1 Cash Flow Diagram 7% per year compounded semi-annually 50,000 50,000 50,000 50,000 50,000 years Figure 1b: Proposal 2 Cash Flow Diagram years

UTCM's Knowledge and Communication Services Centre (KCSC) is considering two proposals to overhaul its network system and infrastructure. They have received two proposals as shown in Figures la and 1b. Analyze which proposal has the best return on investment for 6 years 50,000 50,000 50,000 40,000 100,000 70,000 12% per year compounded yearly 30,000 30,000 20,000 Figure la: Proposal 1 Cash Flow Diagram 7% per year compounded semi-annually 50,000 50,000 50,000 50,000 50,000 years Figure 1b: Proposal 2 Cash Flow Diagram years

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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A project with the following cash flows received each year and with a required return of 8%. With the information given, compute:i. Discounted payback period ii. Net Present Value and iii. Profitability Index.
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%?
The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow $1,905,000 $105,000 555,000 200,000 360,000 475,000 515,000 605,000 595,000 305,000 250,000 250,000 A. What is the payback period of this uneven cash flow? Round your answer to 2 decimal places. 1 2 3 4 5 6 7 8 9 10 years B. Does your answer change if year 10's cash inflow changes to $500,000? The answer for part A if the cash inflow in year 10 changes to $500,000.
Dowling Sportwear is considering building a new factory to produce baseball bats. The project will require an initial outlay of $ 8,000,000 and will generate annual net cash inflows of $ 2,000,000 per year for 6 years. Calculate the project's Net Present Value (NPV) assuming a 9% discount rate: a. $871,837 b. $971,837 c. $6,000,000 d. $4,000,000
BECL Ltd is considering a project, which will involve the following cash inflows and (out)flows: $000 Initial Outlay (400) After 1 year 40 After 2 years 300 After 3 years 300 What will be the NPV (net present value) of this project if a discount rate of 15% is used? a. -$60.8k b. $460.8k c. $240k d. $60.8k
Calculating IRR, payback, and a missing cash flow. the merriweather printing company is trying to decide on the merits of constructing a new publishing facility. The project is expected to provide a series of positive cash flows for each of the next four years. The estimated cash flows associated with this project are as follows. year. Project cash flows 0 ? 1 $780,000 2 $420,000 3 $310,000 4 $480,000 if you know that the project has a regular payback of 2.6 years, what is the project's IRR?
Use the information below to answer Question#40: GIVEN: The XYZ Company is considering the following project with its corresponding financial data. The Company requires a 9% return from its investments. $ 500,000 $ 200,000 $ 225,000 $ 245,000 Initial investment: Expected Cash in-flow Year 1: Expected Cash in-flow Year 2: Expected Cash in-flow Year 3: Present Value Factor of 1 at 9%: n=1: 0.91743 n=2: 0.84168 n=3: 0.77218 40) Choose from one of the following that accurately depicts this decision: A) This investment should not be considered because NPV is a negative $62,048 B) This învestment should be considered because NPV equals positive $62,048 C) This investment should be considered because the IRR for this investment is obviously less than its Required Rate of Return D) B and Care both correct
Need a full solution to this problem please
Hello Mitty Ltd is considering a project MEA as shown below. The estimated cash flows for this project is as follows: Project MEA £000 Investment (immediate cash outflow) 70 Net annual cash inflows: Year 1 40 Year 2 45 The business’s cost of finance is estimate at 12 per cent. Calculate: a) The net present value for project MEA. b) The approximate internal rate of return for project MEA.
Three mutually exclusive project alternatives are being evaluated. The estimated cash flows for each alternative are shown below. The MARR is 15% per year. A decision maker can select one of these alternatives or decide to select none of them. Make a recomendation using the annual worth analysis. Project A Project B Project C Investment ($) 6,000 8,000 9,000 Project life (years) 10 10 10 Annual revenue ($) 5,200 6,000 7,500 Annual cost ($) 2,100 1,800 2,000 Salvage value (S) 1,200 1,500 2,500
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1. EV of $1. PVA of $1, and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 $ 282,000 Project C2 $ 94,000 94,000 94,000 $ 282,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B…
Referring to the table below, calculate the Net Present Value (NPV) and Profitability Index (PI). The required rate of return for these projects is USD10%. The projects’ expected cash flows are as follows: Year Machine 1 (USD) Machine 2 (USD) 0 (17,000) (17,000) 1 8,000 2,000 2 7,000 5,000 3 5,000 9,000 4 3,000 9,500

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