Q: What is the profitability index of this project?
A: Profitability index is one of the capital budgeting method which helps in rejecting or accepting the…
Q: Calculate Net Present Value and Actual Rate of return for both the projects.. How will you evaluate…
A: Net present value of the project means difference of present value of all expected cash inflows from…
Q: Calculate the following for each of the projects. I Net present value II. Profitability Index III…
A: Net present value (NPV) is the difference between the present value of cash inflows and the present…
Q: requirea: 1. Compute the project profitability index for each project. ord
A: Profitability Index = (Net Present Value + Initial Investment)/Initial Investment…
Q: How is the payback period used in capital budgeting? Multiple Choice As a measure of a project's…
A: The payback period is the amount of time it takes for you to recover the cost of your investment. In…
Q: How capital expenditure(investment) analysis helps in making long term decision to determine…
A: Capital Expenditure Decisions include those decisions which require deciding on the purchase of…
Q: How the regular payback periods and discounted payback periods for projects are calculated, after…
A: Pay back period As name itself indicates that pay back period means that how much time required to…
Q: To estimate project value, FCF should be computed at
A: Step 1 The income that an organization receives after a cash outflow is called a free cash flow. It…
Q: Required: a) Compute the project profitability index and Net Present Value for each investment…
A: In this question Net present value is already been calculated so the next step is to calculate the…
Q: How can we aggregate the risk over the project life in terms of net present value?
A: It is an incorporation of the risk level of the project over the life of the in terms of NPV by way…
Q: What is the present value index for Project A?
A: Present Value Index: It represents the ratio of the project's net present value to the initial cost…
Q: /hat is the internal rate of return of the proposed project?
A: IRR(INTERNA RATE OF RETURN), is the rate that equates the present value of cash flows and the future…
Q: One must know the discount rate of an investment project to compute its: a. NPV and PI. b. NPV…
A: NPV: For computing NPV, discounted cash flows and initial cash outflow is necessary Hence, the…
Q: Explain the Analysis Period Equals Project Lives?
A: The concept of analysis period equivalent to project lives is essentially utilized in current worth…
Q: The capital budgeting tools: Net Present Value, Payback Period, and Internal Rate of Return. Which…
A: There are different methods of capital budgeting method.
Q: a. Determine the payback period of each project. b. Which project is acceptable based on payback…
A: Payback period = (Year of last negative cash flow+(Absolute value of last negative cash flow/Next…
Q: find The equivalent annual net benefit of this project in excel.
A: Equivalent Annual Net Benefit =Net Present Value of the project/ Present Value factor for desired…
Q: Why do we need to predict how certain costs will behave in response to change activity in project…
A: Cash flow analysis is the way by which financial health of the company can be checked. In this…
Q: Can we select projects according to their corresponding payback period?
A: Capital Budgeting is a process which helps the firm to determine the expected cash flows of a…
Q: Describe the project-screening tool method used to evaluate the investment projects?
A: Following are the project-screening tool method used to evaluate the investment projects: The…
Q: choosing the most desirable Project using Payback period а. b. Discounted payback c. Net Present…
A: The calculations and the steps can be seen below:
Q: If the net present value of a project is positive, the project earns a return that is Group of…
A: Introduction: According to the net present value rule, executives and shareholders must only invest…
Q: One must know the discount rate of an investment project to compute its: NPV, IRR, PI and payback…
A: The various tools employed in capital budgeting are Net present value (NPV), Profitability Index…
Q: How can we compute the mean return for each project?
A: Mean return refers to the average return that a number of projects of a company earns on an average.…
Q: When does the project reach the payback point?
A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…
Q: Calculate discounted payback period of Project A and B Calculate net present value of A and B Which…
A: solution cash flows given year cash flow A cash flow B 0 -150000 -150000 1…
Q: What is the criteria to accept a project based on the net present value and the internal rate of…
A: Net present value (NPV) Is the difference between present value of all cash inflows and initial…
Q: How to calculate the economic profit of each project?
A: Question 4 A: Economic profit is the profits arrived after deducting opportunity cost from the…
Q: How can we measure the true rate of return of any internal portion of an investment project?
A: True rate of return means real rate of return on investment. It is the actual return earned on an…
Q: Which of the following methods of capital budgeting uses the average annual profits for evaluation…
A: Capital budgeting is the process that a business uses to determine which proposed fixed asset…
Q: (a) Calculate the payback period of each project. ( ) (b) Compute the net present value of the two…
A: Payback Period: It is the period in which the project returns its initial outlay/cost. The lower…
Q: a) Calculate the Internal Rate of Return (IRR), Profitability Index (PI) and Payback period for both…
A: The calculation for Option 1 using excel:
Q: What is the project’s discounted payback period?
A: Discount rate: It is the interest rate to determine the PV of future cash inflows from the project
Q: a. calculate the payback period for each project. b. calculate the net present value for each…
A: Payback period is the time required to recover the cost of investment. Payback period = ((Year of…
Q: Calculate internal Rate of Return of the project. Should the project be accepted? If reinvestment…
A: Internal rate of return is the rate at which the present value of cash inflows are equal to present…
Q: how to Calculate and use the major capital budgeting decision criteria, which are NPV, IRR, MIRR,…
A: Capital budgeting entails selecting projects that add value to a business. The capital budgeting…
Q: Define the term Profitability Index? How can we consider the profitability index of a project?
A: The profitability index (PI), then again alluded to as the value investment ratio (VIR) or profit…
Q: Which provides a better estimate of a project’s “true” rate of return, the MIRR or theregular IRR?…
A: Internal rate of return (IRR): The internal rate of return (IRR) is a measure utilized in capital…
Q: The length of time required to cover the initial outlay of the investment in a project is referred…
A: There are different methods of capital budgeting which help a manager take decision regarding the…
Q: Calculate the IRR for each of the projects.
A: IRR is a tool for making investment decisions. It measures whether an investment is profitable or…
Q: Explain Incremental Analysis for Cost-Only Projects?
A: The question is based on the concept of incremental analysis used in capital budgeting.
Q: What is the project’s payback period?
A: Payback period: A project's payback period can be described as the number of years to recover the…
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- Max is planning to buy an equipment. Model X cost $300 to purchases and result is a costing savings of $150 per year, and last for 5 years. Model Z cost $450, result in costs savings of $130 per year, and last for 10 years. The discount rate is 20%. Required: a. Calculate the appropriate NPV for both the models. b. Calculate the approximate IRR for both the models. c. Calculate the Payback period for both the models. d. Which model should Max buy. e. If the inflation rate is expected to be 10%, will your advice to Max change.Elijah Enterprises will need to upgrade the computer system in 4 years. They anticipate the upgrade to cost $105,300. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =You are evaluating two different systems: System A costs $45,000, has a three year life and costs $5,000 per year to operate. System B costs $65,000, has a five year life and costs $4,000 per year to operate. If the required rate of return is 8%, which system would you prefer? I Next Slide
- Three alternatives have the following cost and annual benefit data associated with them: The loan payments are calculated using an interest rate of 10%, a life equal to the life of the machine, and a down payment of 30%. Use a MARR of 12% and determine which machine, if any, should be purchased. Use incremental rate of return for your analysis. Do not forget to use DN in the analysis.Assume that it costs $1,000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year. find the payback period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitability index (PI) for this projectPerform a financial analysis for an IT Project which requires an initial investment of $32,000, but it is expected to generate revenues of S10,000, $20,000 and $15,000 for the first, second and third years respectively. The target rate of return is 12%. Write the formula and calculate the Net Present Value (NPV). In addition, Justify your result. (For this question Write the answer on the paper and take photo and upload OR Type in the MS Word document and upload the file) tach File Browse My Computer
- 3. Calculate the internal rate of return for a machine that costs $550,000 and provides annual revenue of $125,000 per year for 5 years. You can assume all revenue is received once a year at the end of the year. a. Compare the IRR to the interest rate on a loan to fund the machine cost at 5.3%. Based on this information should you take on a loan to purchase this machine. Justify your answer.Perform a financial analysis for a project using the format below. Assume the projected costs and benefits for this project are spread over four years as follows: estimated costs are $100,00 in year 1 and $25,000 each year 2, 4, and 4. (hint: just change the years in the template file from 0,1,2,3, and 4. This discount factors will automatically be recalculated). Estimated benefits are $0 in Year 1 and $80,000 each years 2,3, and 4. Use an 8% discount rate. Use the business case financials template provided on the companion web site to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, explain whether you would recommend investing in this project based on your financial analysis.Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $106,200. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
- Your firm is considering a project that will cost $4.719 million up front, generate cash flows of $3.55 million per year for 3 years, and then have a cleanup and shutdown cost of $5.96 million in the fourth year. a. How many IRRS does this project have? b. Create an NPV profile for this project (plot the NPV as a function of the discount rate-see the appendix). (NOTE: students will solve this question part using Excel only. A student response is not included in MyFinanceLab). c. Given a cost of capital of 9.9% should this project be accepted? a. The project has IRRS. (Select from the drop-down menu.) 2 3 4Perform a financial analysis for an IT Project which requires an initial investment of $32,000, but it is expected to generate revenues of $10,000, $20,000 and $15,000 for the first, second and third years respectively. The target rate of return is 12%. Write the formula and calculate the Net Present Value (NPV). In addition, Justify your result. (For this question Write the answer on the paper and take photo and upload OR Type in the MS Word document and upload the file)Assume the cost of homeland security border fence is $3 million per mile. If the life of such a fence is 10 years, what is the equivalent annual cost of a 10-mile long fence at an interest rate of 8% per year? Develop the answer using: (a) tabulated factor values, (b) a financial calculator, and (c) spreadsheet functions.