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Question 6   A project has expected cash inflows, starting with year 1, of $2,200, $2,900, $3,500 and finally in year four, $4,000. The profitability index is 1.14 and the discount rate is 12 percent. What is the initial cost of the project?    Group of answer choices   $9,211.06 $9,250.00 $8,166.19 $7,899.16 $8,098.24

Question 4 Assume that you are analysing a capital budgeting project. The initial investment for buying machichnary and equipment cost $5million and project will last for 5 year. The expected revenue is to be $2 million per year and operating cost is expected to be 30% of the total revenue. If the salvage (scrap) value at the end of 5 is estimated to be $0.50 million. You may use straight-line method to calculate the depreciation for the project. The tax rate is estimated to be 30% per annum. The project has the cost of capital of 10%. a. Calculate net cash flows for each year. b. Calculate the NPV and determine the payback period. c. Will you accept this project based on NPV? If the project payback policy is 4 years, will you accept this project?

Question 4: Capital Budgeting a). Consider the following two mutually exclusive projects: YEAR 0 CASH FLOW (A) -$300,000 1 20,000 2 70,000 3 80,000 4 400,000 CASH FLOW (B) -$39,000 18,000 12,000 18,000 19,000 Whichever project you choose, if any, you require a 15 percent return on your investment. (i) If you apply the payback period (PBP) criterion, which investment will you choose? Why? (ii) If you apply the net present value (NPV) criterion, which investment will you choose? Why? (iii)If you apply the profitability index (PI) criterion, which investment will you choose? Why? (iv) If you apply the internal rate of return (IRR) criterion, which investment will you choose? Why? (v) Based on your answers in (i) through (iv), which project will you finally choose? Why? Examiner: Prof. Ebenezer Bugri Anarfo Page 9 b). You are trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $15 million, which will be…

PROBLEM TWO: Capital Budgeting The plant manager of IHK is considering the purchase of a new robotic assemble plant. The new robotic line will cost $125,000. The manager believes that the new investment will result in direct labor savings of $31,250 per year for ten years. Requirements: a. What is the payback period for this project b. What is the net present value or PV assuming a 10% rate of return? c. Should the plant manager accept or reject the project?

QUESTION 3 - Capital budgeting Technique You are considering two independent projects, Project A and Project B. The initial cash outlay associated with project A is RM50,000 and the initial cash outlay associated with project B is RM70,000. The required rate of return on both project is 12 percent. The expected annual free cash flows from each project are as follows Year Project A Project B 1 -RM50,000 -RM70,000 2 12,000 13,000 3 12,000 13,000 4 12,000 13,000 12,000 13,000 12,000 13,000 Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.

more. 3. Net present value method Aa Aa Consider the case of Underwood Manufacturing: Underwood Manufacturing is evaluating a proposed capital budgeting project that will require an initial investment of $120,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $37,600 Year 2 $50,500 Year 3 $45,000 Year 4 $41,900 Assume the desired rate of return on a project of this type is 10%. What is the net present value of this project? -$4,415.10 $18,344.79 -$7,244.50 $23,914.50 Suppose Underwood Manufacturing has enough capital to fund the project, and the project is not competing for funding with other projects. Should Underwood Manufacturing accept or reject this project? Accept the project Reject the project

which one is correct please confirm? QUESTION 19 Whipple Industries Inc. is in the process of determining its optimal capital budget for next year. The following investment projects are under consideration:   Required Expected Rate Project Investment of Return A $2 million   20.0% B $3 million 15.0% C $1 million 13.5% D $4 million 13.0% E $1 million 12.5% F $3 million 12.0% G $5 million 11.5% ​ The firm's marginal cost of capital schedule is as follows: Amount of   Funds Raised Cost $0 - $6 million 12.0% $6 million - $12 million 12.5% $12 million - $18 million 13.5% Over $18 million 15.0% ​ Determine Whipple's optimal capital budget (in dollars) for the coming year.   a. $5 million   b. $10 million   c. $14 million   d. $11 million

Problem 21 Compute the (1) net present value and (ii) discounted payback period of the following capital budgeting projects. The firm's required rate of return is 12 percent. Projects Year 123 Zeta $(50,000) 20,000 15,000 30,000 Omega $(45,000) 42,000 9,000 1,850 Based on your calculations, which project will be selected if you have to choose only one of the two projects?

Question: You are a financial analyst for the Hitler Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each project is 12 percent. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year Project X Project Y 0 ($10,000) ($10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 Required: Calculate each project’s payback period, discounted payback period, net present value (NPV), profitability index and internal rate of return (IRR). Which project or projects should be accepted if they are independent? Which project should be accepted if they are mutually exclusive?

PROBLEM TWO: Capital Budgeting The plant manager of IHK is considering the purchase of a new robotic assemble plant. The new robotic line will cost $250,000. The manager believes that the new investment will result in direct labor savings of $62,500 per year for ten years.Requirements:What is the payback period for this projectWhat is the net present value or PV assuming a 10% rate of return?Should the plant manager accept or reject the project?What else should the manager consider in the analysis?

Practical Question The total investment required for two projects are estimated at OMR100, 000. The cash flows expected from the two projects for the first four years are explained in the table below. Year Project A Project B Year 1 15,000 15,000 Year 2 28,500 40,000 Year 3 40,000 21,500 Year 4 50,000 35,000 Use the above information and advise which project to select based on payback period method 11 直 hp

Part 1 Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive projects. The required rate of return is 15% and the target payback is 4 years. Explain which project is preferable under each of the four capital budgeting methods mentioned above:   Table 1 Cash flows for two mutually exclusive projects Year Investment A Investment B 0 -$5,000,000 -5,000,000 1 $1,500,000 $1,250,000 2 $1,500,000 $1,250,000 3 $1,500,000 $1,250,000 4 $1,500,000 $1,250,000 5 $1,500,000 $1,250,000 6 $1,500,000 $1,250,000 7 $2,000,000 $1,250,000 8 0 $1,600,000   Part 2 Please study the following capital budgeting project and then provide explanations for the questions outlined below:   You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago…

CENGAGE MINDTAP Assignment: Chapter 09 Capital Budgeting Techniques Locke Manufacturing Inc. is analyzing a project with the following projected cash flows: Year Cash Flow 0 1 2 3 4 -$1,324,800 300,000 450,000 546,000 360,000 This project exhibits Locke's desired rate of return is 7.00%. Given the cash flows expected from the company's new project, compute the project's anticipated modified internal rate of return (MIRR). (Hint: Round all dollar amounts to the nearest whole dollar, and your final MIRR value to two decimal places.) O 6.70% O 7.53% 8.37% cash flows. O 9.21% Q Search this course X

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