Year 0 -20,000 Project 1 Project 2 Project 3 Project 4 Project 5 -20,000 -20,000 -20,000 -20,000 Year 1 4000 5000 2000 2000 5000 Year 2 3000 4000 3000 5000 5000 Year 3 2000 12,000 4000 9000 5000
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- 6) Year Project A Project B Difference 0 -75000 -75000 0 1 26300 24000 2300 2 29500 26900 2600 3 45300 51300 -6000 Crossover rate 14.60% Hi I need help with the following question! Thank you! Are you going to accept project A or project B? Why?What is the IRR of Project A? Year Project A 0 -3000 1 1000 2 1000 3 2500 18.54% 19.54% 23.54% 29.54% unansweredPROJECT A PROJECT BInitial Outlay -60,000 -80,000Inflow year 1 17,000 18,000Inflow year 2 17,000 18,000Inflow year 3 17,000 18,000Inflow year 4 17,000 18,000Inflow year 5 17,000 18,000Inflow year 6 17,000 18,000
- QUESTION 5Read the information below and answer the following questionsINFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you:PROJECT COS PROJECT TANNet Profit Net ProfitYear R R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method.5.4 Benefit Cost Ratio of Project Cos (expressed to three decimal places). 5.5 Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION.C9 1 2 3 Question 1: COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV) 4 5 Project A 6 Required 7 Outflow 8 Inflow 9 Net Inflow LO NPV Interest rate Year 0 Year 1 Year 2 Year 3 Year 5 Year 6 Total 15% ($700,000) $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 ($700,000) $225,000 1,125,000.00 $429,000 $225,000 $54,234.90 1 L2 3 Project B 4 Required 5 Outflow 6 Inflow 15% ($400,000) $110,000 $110,000 $110,000 $110,000 $110,000 $110,000 $110,000 $110,000 $110,000 $110,000 ($400,000) $550,000 $150,000 7 Net Inflow 8 NPV ($31,262.94) Based on the information above, identify which project (Project A or B) should be accepted? Explain why. By changing the figures in the excel template (above), assume the interest rate for Project A fell to 13%, and Cash outflow (The initial investment) was $950,000, Cash Inflows was $350,000 per annum for the 6 years, and Net inflows was also $250,000. For Project B, assume interest rate also fell to 13% but Cash outflow, Inflow and…Year 0 $10,000.00 1 $ 3,000.00 Project A Cash Flow Project B Cash Flow $11,000.00 $5,000.00 2 $ 4,000.00 $ 4,000.00 3 $ 5,000.00 $ 4,000.00 4 $3,000.00 $ 3,000.00 Assuming that the relevant cost of capital for both projects is 10%, you should be able to determine the net present value (NPV) and the internal rate of return (IRR) for both project. Assume now that the firm has capital rationing, but knows that its true reinvestment rate is 21%, while its cost of capital is 10 percent. Given this information, determine the modified net present value (MNPV) for Project A. $3,811.27 O $3,622.02 O $4,280.07 O $4,162.90 O $4,404.83
- A consulting company has designed the accompanying spreadsheet model to compute a project's revenues and profits. The costs of each project include technology costs, labor costs, and project manager (PM) bonus. The PM bonus is computed as 10% of the profit of the project if the project makes a profit and 0 if the project loses money. The spreadsheet model seems to be producing erroneous results. Click here for the Excel Data File a. Use the model auditing tools to identify the error. The error is due to O circular reference O incorrect cell reference O invalid user inputs O none of the above b. Repair the spreadsheet so that it produces correct outcomes. What should be the PM bonus for Project 1? What is the project profit for Project 2? PM bonus for Project 1: Final project profit for Project 2:Period A B D -3500 -3000 1500 1800 2100 -3000 -3600 3000 1800 1800 1800 2 2000 1=13% 5500 1000 Which among the four projects has an annual equivalent worth of around P570k?Question 16 of 20 View Policies Current Attempt in Progress O $12960. O $12800. O $25600. O $11800. eTextbook and Media - /3 Save for Later On January 1, 2022, Crane Corp. purchased equipment for $64000. It was expected to last 5 years, after which it will be sold for $5000. It is expected to be used for a total of 11000 machine hours, and was used for 840 hours during the year ended December 31, 2022. The depreciation expense for 2022 using the double diminishing-balance method will be = Attempts: 0 of 1 used COP : Submit Answer 50:57
- Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?9850 A= 3750 -10% 1 2 3 7 8 9 10 year 3% per year 6% per year 9% per year Exercise: 1. Find PoSpreadsheet Link What is the IRR of the following project? Cash Flow Year 0 32.000 9,000 1. 2 10,000 15,200 7,800 4. 1) 10.8% 2) 11.2% • 3) 11.7% 4) 12.0% 5) 12.3% 234
