Chap009 NPV

Compute the Profitability Index (PI)  for each project?   Project A Project B Profitability Index (PI)      5- In light of your answers above, suppose that these two projects might be mutually exclusive or independent. According to these two assumptions, fill in the blanks in the table below with the suitable answer:   Points Investment Criteria If A and B are mutually exclusive, then I would select If A and B are independent, then I would select   PBP       NPV       IRR       PI

Use the information provided to answer the questions Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places).Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). Use your answers from previous question to recommend the project that should be chosen. Motivateyour choice.

Refer to the table below to answer the following question.   Project Initial Investment NPV P 200 22 Q 180 26 R 185 38 S 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S

Evaluate the projects using each of the following criteria, stating which project(s) Carrium Insights Inc. should choose under each criteria and why: i.Discounted Payback ii.Net Present Value

which of the following could potentially impact the NPV of a project? 1. initial investment amount 2. book value of the initial investment at the end of the project 3. opportunity costs 4. sunk costs a. 1 and 3 b. 1,2,3 and 4 c. 1,2 and 3 d. 1,2 and 4 e. 1 and 2

Mf4.  1. Calculate the Payback period   2. Calculate the Net Present Value (NPV) of both projects   3. Calculate the Internal Rate of Return (IRR) of both projects   4. Critically discuss the merits of each investment appraisal method, then discuss the result of the evaluations you have made of the two projects and advise the company which project should be undertaken

Using image: a-1. What is the payback period for each project a-2. If you apply the payback criterion, which investment will you choose? b-1. What is the discounted payback period for each project? b-2. If you apply the discounted payback criterion, which investment will you choose? c-1. What is the NPV for each project? c-2. If you apply the NPV criterion, which investment will you choose? d-1. What is the IRR for each project? d-2. If you apply the IRR criterion, which investment will you choose? e-1. What is the profitability index for each project? e-2. If you apply the profitability index criterion, which investment will you choose? f. Based on your answers in (a) through (e), which project will you finally choose?

(question3 c,d)   c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project.

Calculate the internal rate of return for project B

which of the following do you need to know to calculate the IRR of a project?. 1. project's estimated cash flows 2. project's level of risk 3. project's required rate of return 4. project's NPV a. 1 and 2 b. 4 only c. 1,2 and 3 d. 1 only e. 2 only

QUESTION 5 Invest in any or all of the four projects whose relevant cash flows are given in the following table. The firm has RM7,000,000 budgeted to fund these projects, all of which are known to be acceptable. Initial investment for each project is the same for all projects which is RM1,600,000. The rate of retum for all projects is equivalent to 8%. Operating cash outflow Project X Project Y Year 1 Cash Outflow RM1,600,000 (for each project) RM 440,000 340,000 220,000 (110,000) ( 95,000 ) 105,000 Operating Cash Inflows RM 140,000 180,000 250,000 260,000 370,000 460,000 1 2. 3. 4. 5. 6. 7. 220,000 388,000 8. 9. Use this table for PROJECT X and Y Period PVIF 8% 0.9259 0.8573 3 0.7938 4 0.7350 0.6806 0.6302 7 0.5835 8 0.5403 0.5002 10 0.4632

Question 5: Find the net present value, interpret whether the NPV suggests you should accept or reject the project, find the payback period, find the discounted payback period, find the profitability index, interpret whether the profitability index suggests you should accept or reject the project, find the internal rate of return, explain whether the internal rate of return can repay the cost of borrowing money to conduct the project, find the modified internal rate of return, and explain with the modified internal rate of return can repay the cost of borrowing money to conduct the project. All for the following situation: The initial capital outlay is $175,000, the first-year annual operating cash flow is projected to be 20,000 but should grow by 5% per year during each of the project's 30 years, the after-tax-salvage cash flow is guessed to be $500,000, the required rate of return on this project is 15.50% and the company weighted average cost of capital is 12.50%.

Refer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S

(a) Calculate the payback period for each project. (b) Calculate the net present value (NPV) for each project. (c) Calculate the profitability index of each project. (d) Explain to the company which project should be implemented. Support your answer.

McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $533,000, has an expected useful life of 15 years, a salvage value of zero, and is expected to increase net annual cash flows by $72,300. Project B will cost $366,000, has an expected useful life of 15 years, a salvage value of zero, and is expected to increase net annual cash flows by $50,800. A discount rate of 9% is appropriate for both projects. Click here to view PV table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique. Based on your answer which project  is better and why?   please show the steps and formula  Thanks

Due to the limitations of the weighted scoring model (weighting scheme), briefly discuss how Coadycan use the following financial models for project selection.1. Net Present Value2. Payback Analysis

c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project.Note : No need excel formula !

Pls refer to the attached image. pls show formula and solution in manual calculation. 1. NPV of Project Z? 2. Payback period of Project X? 3. Payback period of Project Y? 4. Payback period of project Z? 5. Based on the calculated NPV and payback period, which project would you recommend and why? Include the implications of projects' NPVs and payback period in your explanation.

Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure. Given r=6%, which project would you choose if you decide to use the internal rate of return (IRR) as the criterion?    Group of answer choices Project A Project B Neither Either

Which of the following statement is correct Select one: a. A project is accepted when profitability index will be greater than one b. All statements are correct c. A project is accepted when net present value is greater than zero d. A project is accepted when payback period is less than the other project

One must know the discount rate of an investment project to compute its: a.   NPV and PI. b.   NPV and IRR. c.   PI NPV IRR and Payback Period. 4.   Payback period and IRR.

Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the financial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of return must be defined. The required rate of return is the minimum -v acceptable rate of return that an investment must yield for it to make sense economically. Managers often choose a required rate of return above their cost of capital to ensure that the inherent uncertainties surrounding future cash flows is addressed. This can be risky, however, as it biases the process toward short-term projects. If the NPV is positive, then the project should be accepted - V ; if it is negative, then the project should be rejected V. Let's look at a net present value example using the present value of an ordinary annuity table. The company has a project with a 5-year life that…

It is good to compute first the additional benefits that a project can give and the additional cost incurred by implementing a project. This concept talks about a. Law of Supply and Demand b. Marginal Cost Benefit Analysis c. Time Value of Money d. Financial Ratios

1. Compute the project profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return.

Homework i A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects. Present value of net cash flows (excluding initial investment) Initial investment. Complete this question by entering your answers in the tabs below. Required A a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? FI Compute the net present value of each project. Potential Projects Project A Present value of net cash flows Initial investment Net present value 2 Required B W F2 # Required C 3 APR 11 80 F3 $ 4 m tv 6 Project A $ 9,972 (10,000) 2 of 8 c F6 # & 7 Project B $ 10,697 (10,000) F7 Next > Y U il A 8 Project C $ 10,653 (10,000) FB DD ( F9 9 FU O

If the net present value of a project is positive, the project earns a return that is Group of answer choices - equal to the required rate or return - greater than the required rate of return - equal to the accounting rate of return - greater than the accounting rate of return

Evaluation of Projects or ME Alternatives based on different Economic Worth Analysis: AW analysis of one project Choose... ROR analysis of two alternatives Choose... PW analysis of one project Choose... • ROR analysis of one project Choose... 0 PW analysis of ME Alternatives Choose... The remaining undepreciated capital investment in year t is called: Select one: O a BVt O b. P OC B O d. MV Although land is considered as real property, it is not depreciable. Select one: O True O False