The following table contains information about four potential investment projects that Castle Corporation is considering. Project Required Investment Project Life ABCD A $640,000 $890,000 $1,140,000 $1,640,000 Required: ARR Payback Period NPV Profitability Index 5445 19.50% 3.9 17.75% 3.5 $ 203,250 $193,062 2.88 1.22 10.75% 3.2 $ 216,670 1.35 5 12.45% 3.8 $ 246,008 1.30 1. Rank the four projects in order of preference under each method indicated by the headers: 2. Which method is the best for evaluating the investments? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Rank the four projects in order of preference under each method indicated by the headers: Accounting Rate of Return Payback Period Net Present Value Profitability Index 1st preferred 2nd preferred 3rd preferred 4th preferred

The following table contains information about four potential investment projects that Castle Corporation is considering. Project Required Investment Project Life ABCD A $640,000 $890,000 $1,140,000 $1,640,000 Required: ARR Payback Period NPV Profitability Index 5445 19.50% 3.9 17.75% 3.5 $ 203,250 $193,062 2.88 1.22 10.75% 3.2 $ 216,670 1.35 5 12.45% 3.8 $ 246,008 1.30 1. Rank the four projects in order of preference under each method indicated by the headers: 2. Which method is the best for evaluating the investments? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Rank the four projects in order of preference under each method indicated by the headers: Accounting Rate of Return Payback Period Net Present Value Profitability Index 1st preferred 2nd preferred 3rd preferred 4th preferred

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $686,053 $516,654 $295,458 Annual net cash flows: Year 1 411,000 288,000 177,000 Year 2 382,000 259,000 122,000 Year 3 349,000 230,000 89,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each project. Use the…
6 Lewis Services is evaluating six investment opportunities (projects). The following table reflects each project’s net present value NPV and the respective initial investments required. All of these projects are independent.Project NPV InvestmentI 2,500 2,500II 4,000 20,000III 7,500 30,000IV 8,000 40,000V 2,000 10,000VI 2,500 5,000Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services’ management? Group of answer choices II, IV and III IV only I, IV and VI I, II, III, V, and VI I, III and IV I, II, III, IV, V, and VI I, III, and VI I, III, V, and VI
Calculate the profitability index for the below projects and indicate your order of choices. Project Present Value Investment A $145,000 $95,000 $135,000 $80,000 $175,000 $110,000 Select one: a. B, A and C b. A, C and B c. B, C and A d. C, B and A B с
Net Present Value Method, Present Value Index, and Analysis First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $787,317 $584,976 $298,035 Annual net cash flows: Year 1 391,000 278,000 164,000 Year 2 364,000 250,000 113,000 Year 3 332,000 222,000 82,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 10%,…
Based on the parameters calculated, should this project goes ahead? Give your reasons for your answer. Economic Parameters Base case Project IRR Equity IRR NPV($millions)@12% Capital Expenditure($million) PayBack period (Year) WACC (Based on 75/25) 13.68 15.89 9,172,880 (85,000,000) 8.92 0.1246
The following table contains information about four potential investment projects that Castle Corporation is considering. Payback Period Required Investment $ 900,000 $ 1,150,000 $ 1,400,000 $ 1,900,000 Project B с D Project Life 5 Required 1 ARR 39.00% 21.00% 22.50% 22.20% Complete this question by entering your answers in the tabs below. 1st preferred 2nd preferred 3rd preferred 4th preferred 3.6 4.8 4.5 2.5 Required: 1. Rank the four projects in order of preference under each method indicated by the headers: 2. Which method is the best for evaluating the investments? Profitability Index 2.19 1.98 1.61 1.56
Please give exact answer and excel steps Jeans LLC has a project with the following cash flows . Its required rate of return is 5 % , Year 012345 Cash Flow Project A -52,000.00 25,000.00 17,000.00 14,000.00 12,000.00 -3,000.00 What is the internal rate of retum ( IRR ) for this project ? options: a. 11.73859230479%b. 11.73962884992%c. 11.738592037872%d. 11.738591574995%e. 11.738592402818%f. 11.738672984783% Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Consider the following investment project: n An I0 -$8,500 9%1 $4,400 12%2 $4,400 10%3 $1,500 13%4 $3,500 12%5 $4,300 10%Suppose, as shown in the preceding table, that the company's reinvestment opportunities (that is, its MARR) change over the life of the project. For example, the company can invest funds available now at 9% for the first year, 12% for the second year, and so forth. Calculate the net present worth of this investment, and determine its acceptability.
b) Following data relate to five independent investment projects : Initial Outlay Projects P ORST 1,000,000 240,000 184,000 11,500 80,000 Annual Cash Inflows Life in Years 250,000 24,000 30,000 4,000 12,000 8 15 20 5 10 Page 2 of 3 Assume a 10% required rate of return and a 50% tax rate. Rank these five investment projects according to each of the following criteria: (i) Pay-back Period. (ii) Accounting Rate of Return. (iii) Net Present Value Index. (iv) Internal Rate of Return.
Q5. Consider the investment projects given in the following table: Net Cash Flow n Project A Project B Project C - $100 - S150 - $10 1 30 50 410 2 50 50 -558 3 50 252 4 50 21.11% Assume that MARR = 12% in the following questions: IRR 23.24% 20%, 40%, 50% Identify simple and non-simple projects. Identify pure and mixed investments. Determine the IRR for Project C. (Hint: You can use trial-error method followed by linear interpolation.) Which project(s) is(are) acceptable? b) c) d)
Rocky Red Ltd has provided the following figures for two investment projects, only one of which may be chosen. Rocky Red Ltd has provided the following figures for two investment projects, only one of which may be chosen. Project Alpha Project Beta Initial outlay £200,000 £180,000 Profit for the year 1 £80,000 £10,000 2 £60,000 £10,000 3 £40,000 £30,000 4 £30,000 £25,000 Estimated value at the end of year 4 £10,000 £5,000 Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 15%.…
11. Imperial Systems has $1 million available for capital investments during the currentyear. A list of possible investment projects, together with their net investments andnet present values, is provided in the following table:Project Net Investment Net Present Value1 $200,000 $20,0002 500,000 41,0003 275,000 60,0004 150,000 5,0005 250,000 20,0006 100,000 4,0007 275,000 22,0008 200,000 –18,000a. Rank the various investment projects in terms of their profitability indexes(computed to three decimal places).b. In the order of decreasing profitability index values and considering thecapital constraints, which projects should be adopted? Are all capital fundsexpended?c. Is there another combination that produces a higher aggregate net presentvalue than the one developed in part b?d. If less than the entire amount of available funds is invested, what is theopportunity cost of the unused funds?