4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and Blogging. Data pertaining to the two projects are given as follows: Cost of equipment needed now Working capital investment needed now Annual cash operating inflows Salvage value of equipment in 5 years Blogging P80,000 23,000 6,000 Vlogging P80,000 18,000 Additional information: Both projects will have a useful life of 5 years; at the end of 5 years, the working capital investment will be eleased for use elsewhere. J.A.M.'s required rate of return is 12%. What is the net present value of project Blogging? Solution:
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- Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects Project A Project B Useful life 5 years 5 years Present value of cash inflows $84,440 $53,300 Present value of cash outflows $79,000 $46,000 What is the present value index for Project A? Multiple Choice 1.069 0.862 1.097 0.886Consider the following investment projects for SDL Engineering. All of the projects have a three-year investment life: Project’s Cash Flow ($) Time (n) Project A Project B Project C Project D 0 -$1,500 -$1,200 -$1,600 -$3,000 1 0 $600 -$1,800 $800 2 0 $800 $800 $1,900 3 $3,000 $1,500 $2,500 $2,300 Compute the Net Present worth of each project where interest rate is 9%. Which project do you recommend based on the NPW? Other than the NPW, why else would you recommend this project? (you will be using the same rate that was for part A for this part. Calculate the IRR for each project Show all workings in excel
- X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows: Year Project A Project B 1 $ 23,000 $ 20,000 2 10,000 9,000 3 10,000 15,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) project A 0.87 years project B 1 year b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 8 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places.)X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1 $ 12,000 $ 10,000 2 8,000 6,000 3 6,000 16,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent.Better Health Inc. is evaluating two capital investments, each of which requires an up-front (time 0) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows: Year Project A ($) Project B ($) 1 500,000 2,000,000 2 1,000,000 1,000,000 3 2,000,000 600,000 a. What is each project’s IRR? b. What is each project’s NPV if the opportunity cost of capital is 10 percent? 5 percent? 15 percent?
- Problem. Assume the following cash flow for 2 projects. Assuming that the cash flows are occurring at the end of the year. Find the payback period for both these projects. Year Project 1 Project 2 -1000 600 400 -1000 100 400 1 2 and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by tronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is stricty prohibitec 3 200 200 600 4 600 5 100 700 Solution:The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) S (360,000) $ (480,000) Present value of cash inflows 336, 140 522,970 433, 400 567, 270 Net present value $ 66, 140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: Compute the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows Capital investment Annual net income: (a) Year 1 2 3 4 5 Total ow Transcribed Text Project Bono $160,000 Project Bono 14,000 Project Edge 14,000 Project Clayton 14.000 ow Transcribed Text 14,000 Your answer is incorrect. 14,000 $70,000 Project Edge Project Clayton $175,000 $200,000 18,000 17,000 16,000 12,000 9,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15% (Assume that cash $72,000 O Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. years Compute the cash payback period for each project. (Round answers to 2 decimal places, eg years C years 27,000 23,000 9 21.000 13,000 C 12,000 $96,000 1.50.) (b) The parts…
- The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4 Investment required $ (270,000) $ (450,000) $ (360,000) $ (480,000) Present value of cash inflows 336,140 522,970 433,400 567,270 Net present value $ 66,140 $ 72,970 $ 73,400 $ 87,270 Life of the project 6 years 3 years 12 years 6 years Internal rate of return 18% 19% 14% 16% The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can’t accept all of the available projects. Required: I need help finding the profitability index for each investment project. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 14,420 17.510 23,690 3 14,420 16,480 21,630 14.420 12.360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years eTextbook and Media Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or…Outdoor Structures, Inc. is considering two projects, A and B. Each project requires an investment of $1,000. Using the payback period as the method for analyzing each project, which project should Outdoor Structures choose? Year A B 1 $100 $500 2 200 400 3 300 300 400 100 500 600 4 5 6 - --