n Ltd is considerinc XO VitalSource Bookshelf: Manageria XG Marian Ltd is considering two mu Xses/1155/quizzes/6003/take- LIBIS - Sampoerna... DashboardA VitalSource Booksh...O Spotify - Web Player MLA ForShow your computationScooby Doo Ltd is considering two mutually-exclusive projects with the followingdetails:Project AInitial investment is $450,000Scrap value in year 5 is $20,000Year:1345Annual cash flows20015015055100($000)Project BInitial investment $100,000Scrap value in year 5 is $10,000Year:1234Annual cash flows($000)202030404033% an Ltd is considerinc XA VitalSource Bookshelf: Manageria xG Marian Ltd is considering two mu Xrses/1155/quizzes/6003/take= LIBIS - Sampoerna... O Dashboard1 VitalSource Booksh..e Spotify - Web PlayerP MLA FormattYear:13.4.5.Annual cash flows2020304040($000)Assume that the initial investment is at the start of the project and the annual cashflows accrue evenly over the year.Required:a. Calculate the Net Present Value to the nearest $000 for Projects A and B if therelevant cost of capital is 8.2%b. Calculate the profitability index for both projects.C. If both projects are mutually exclusive, which project that you accept?Edit Vicw Insert FormatTools Table12pt v Paragraph vA38%

NPV is the present value of all the cash flows related to the project over a period of time so as…

a. Calculate the Net Present Value to the nearest $000 for Projects A and B if the relevant cost of capital is 8.2% b. Calculate the profitability index for both projects. c. If both projects are mutually exclusive, which project that you accept?

a. Calculate the Net Present Value to the nearest $000 for Projects A and B if the relevant cost of capital is 8.2% b. Calculate the profitability index for both projects. c. If both projects are mutually exclusive, which project that you accept?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

n Ltd is considerinc X
O VitalSource Bookshelf: Manageria X
G Marian Ltd is considering two mu X
ses/1155/quizzes/6003/take
- LIBIS - Sampoerna... Dashboard
A VitalSource Booksh...
O Spotify - Web Player MLA For
Show your computation
Scooby Doo Ltd is considering two mutually-exclusive projects with the following
details:
Project A
Initial investment is $450,000
Scrap value in year 5 is $20,000
Year:
1
3
4
5
Annual cash flows
200
150
150
55
100
($000)
Project B
Initial investment $100,000
Scrap value in year 5 is $10,000
Year:
1
2
3
4
Annual cash flows
($000)
20
20
30
40
40
33%

an Ltd is considerinc X
A VitalSource Bookshelf: Manageria x
G Marian Ltd is considering two mu X
rses/1155/quizzes/6003/take
= LIBIS - Sampoerna... O Dashboard
1 VitalSource Booksh..
e Spotify - Web Player
P MLA Formatt
Year:
1
3.
4.
5.
Annual cash flows
20
20
30
40
40
($000)
Assume that the initial investment is at the start of the project and the annual cash
flows accrue evenly over the year.
Required:
a. Calculate the Net Present Value to the nearest $000 for Projects A and B if the
relevant cost of capital is 8.2%
b. Calculate the profitability index for both projects.
C. If both projects are mutually exclusive, which project that you accept?
Edit Vicw Insert Format
Tools Table
12pt v Paragraph v
A
38%

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a ) Calculation of NPV for both the projects

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