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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Cash payback period, net present value method, and analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Each project requires an investment of $900,000. A rate of 15% has been selected for the net present value analysis. Instructions 1. Compute the following for each product: a. Cash payback period. b. The net present value. Use the present value of $1 table appearing in this chapter (Exhibit 2). 2. Prepare a brief report advising management on the relative merits of each project.
Accounting Draw the cash flow diagram for the given project below and then calculate the project net profit. The following table shows the activities description, dependency, duration, and cost elements. Assume the followings: Project overhead 8%. Tax 3%. Bond 1.25%. Profit 6%. Interest rate 9% per year. Down payment 10% with a guarantee letter, which costs 0.25% per month paid to the bank at the project start date. A performance guarantee letter of 10% will be submitted from contractor at the project begin. Invoices are submitted every month and will be paid a month later. Retention 10% and will be paid at the last invoice. Subcontractors: retention 10% will be paid at the last invoice, down payment 20%. Labor: labor expenses to be paid bi-weekly. Equipment: equipment expenses
Talent Inc. is considering a project that has the following cash flow and WACC data.WACC: 7%Year 0 1 2 3Cash flows -$1,600 $500 $600 $700 (1) What is the project's NPV?(2) What is the project's IRR?(3) What is the project's Payback Period?(4) What is the project's Discounted Payback Period?
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
Kabul Storage is considering a project that has the following cash flow data. What is the project's IRR? If the company’s cost of capital is 12% should the project be accepted? Explain. Year 0 1 2 3 Cash flows -$1,100 $450 $470 $490
Explain well with proper answer.
1. Google, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusively projects. Project Alpha requires an initial outlay of BD 24000; project Beta requires an initial outlay of BD44000. Using the expected cash inflows given for each project in the following table. Expected cash flow Year Project Alpha Project Beta 1 BD6000 BD19000 2 BD9000 BD6000 3 BD4000 BD4000 4 BD6000 BD13000 5 BD3500 BD5000 6 BD2000 BD4000 Required: 1. Determine the payback period of each project 2. Because they are mutually exclusive, Google must choose one. Which should the company invest in? 3. Explain why one of the projects is the better choice than the other
Payback, NPV, and IRR Rieger International is evaluating the feasibility of investing $87,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table: E. The firm has a 9% cost of сapital. a. Calculate the payback period for the proposed investment. b. Calculate the net present value (NPV) for the proposed investment. c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment. d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? ..... a. The payback period of the proposed investment is years. (Round to two decimal places.) b. The NPV of the proposed investment is $ (Round to the nearest cent.) c. The IRR of the proposed investment is %. (Round to two decimal places.) d. Should Rieger International accept or reject the proposed investment?…
Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected to increase the cash flow for the next five years as follows: $ 10000, $ 15000, $ 15000, $ 20000 and $ 20000. If the discounting rate is 12%, what is the IRR of the project? Note: Use EXCEL function “=IRR(Cash Flow Range)” 18.54% 15.96% 12.43% - 2.48%
Barry Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR? WACC = 9.75% Year 1 3 5 CFs -$53,600 8,010 16,020 24,030 32,040 40,050 2.
Green Submarine has a project with the following cash flows: Year Cash Flows −$ 17,300 1 6,530 2 11,000 3 7,510 4 −2,500 The discounting rate is 8 percent and the reinvestment rate is 10 percent. What is the MIRR for this project using the combination approach?
Moates Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 200,000 Annual cash flow $ 123,000 per year Expected life of the project 4 years Discount rate 10% Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

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