You have been asked to sit on the Ministry’s project selection committee. The following information has been provided; please recommend per category the project to be selected based on the rules stipulated. The Ministry has a payback period rule of  4 years and under. Show all working and state reasons for selection. Payback Period  Project A’s investment is $1,200,000 with an annual net cash inflow of $309,500, Project B’s investment is $500,000 with bi-annual returns of $50,000. Net Present Value (NPV)  Project A’s investment is $11,000,000 with a net cash inflow of $3,895,000 and $8,825,000 for each year, respectively, for two years. Project B’s investment is $5,000,000 with a net cash inflow of $895,000 and $4,798,000 for each year, respectively, for two years. Both project’s discounted rate is 7%

A company is intending to invest in a capital budgeting project to manufacture a medical testing device and has projected the following sales: Year 1                       Year 2                   Year 3                    Year 4                      Year 5 50,000                   66,400                   81,200                   68,500                   54,500 The installed cost of the new assets will be $18,500,000 which will be depreciated using the 7-year MACRS schedule. The assets will have a salvage value of $3,700,000. Initial NWC requirements are $1,500,000 and additional working capital needs are estimated to be 15% of the projected sales increases for the following year. Total fixed costs are $2,000,000 per year. The medical device has a selling price of $300 per unit and variable production costs are $175. The firm has a marginal tax rate of 35% and a required rate of return of 18%. Analyze this project and give your recommendation as to whether they should invest in it or…

Bridgeport Company has hired a consultant to propose a way to increase the company's revenues. The consultant has evaluated two mutually exclusive projects with the following information provided for each: Capital investment Annual cash flows Estimated useful life Project Turtle $1,125,000 184,000 10 years Project Snake $645,000 109,000 10 years Bridgeport Company uses a discount rate of 9% to evaluate both projects.

You are evaluating three mutually exclusive public-works projects with the respective costs and benefits included in the table below. The useful life of each of the projects is 30 years and MARR is 12% annually. Should any of the projects be selected? (Hint: use incremental B-C Analysis)   A B C Capital Investment $10,500,000 $12,000,000 $14,000,000 Annual Operating and Maintenance Costs $850,000 $925,000 $930,000 Market Value $1,350,000 $1,950,000 $2,100,000 Annual Benefit $2,250,000 $2,565,000 $2,700,000