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- A Company is attempting to select the best of three mutually exclusive projects.The initial investment and after-tax cash inflows associated with these projects are shown in thefollowing table. Cash flow Project A Project B Project CInitial Investment 100000 120,000 130,000Year 1 Cash Inflows 30000 36,500 38000Year 2 cash inflows 35000 45000 20000Year 3 cash inflows 40000 40000 42000Year 4 cash inflows 38000 35000 45000Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7%, cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. Create a spreadsheet to answer the following questions:a) Calculate the firm‘s cost of capital (WACC) "Answered Before"b) Calculate the payback period for each project. "Answered Before"c) Calculate the net present value (NPV) of each project,d) Calculate the internal rate of return (IRR) for each project.e)…A Company is attempting to select the best of three mutually exclusive projects.The initial investment and after-tax cash inflows associated with these projects are shown in thefollowing table. Cash flow Project A Project B Project CInitial Investment 100000 120,000 130,000Year 1 Cash Inflows 30000 36,500 38000Year 2 cash inflows 35000 45000 20000Year 3 cash inflows 40000 40000 42000Year 4 cash inflows 38000 35000 45000Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7%, cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. Create a spreadsheet to answer the following questions:a) Calculate the firm‘s cost of capital (WACC)b) Calculate the payback period for each project.c) Calculate the net present value (NPV) of each project,d) Calculate the internal rate of return (IRR) for each project.e) Discuss any conflict in ranking that may…A corporation is evaluating a project with the following cash flows: Year 0: -28700 Year 1: 10900 Year 2: 13600 Year 3: 15500 Year 4: 12600: Year 5: -9100 The company uses a discount rate of 12% and a reinvestment rate of 7% on its project: a) Calculate MIRR using the discounting approach. b) Calculate MIRR using the reinvestment approach c) Calculate MIRR using the combination approach.
- ABC Inc. is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 4 Cash flows -$550 $300 $290 $280 $270Juhayna Food Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flow Project A Project B Project C Initial Investment 100000 120,000 130,000 Year 1 Cash Inflows 30000 36,500 38000 Year 2 cash inflows 35000 45000 20000 Year 3 cash inflows 40000 40000 42000 Year 4 cash inflows 38000 35000 45000 Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. TO dO Create a spreadsheet to answer the following questions: Calculate the firm‘s cost of capital ( WACC) Calculate the payback period for each project. Calculate the net present value (NPV) of each project,…Juhayna Food Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flow Project A Project B Project C Initial Investment 100000 120,000 130,000 Year 1 Cash Inflows 30000 36,500 38000 Year 2 cash inflows 35000 45000 20000 Year 3 cash inflows 40000 40000 42000 Year 4 cash inflows 38000 35000 45000 Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. TO dO Create a spreadsheet to answer the following questions: a) Calculate the firm‘s cost of capital ( WACC) b) Calculate the payback period for each project. c) Calculate the net present value (NPV) of each project, d) Calculate the internal rate of return (IRR) for each…
- Juhayna Food Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flow Project A Project B Project C Initial Investment 100000 120,000 130,000 Year 1 Cash Inflows 30000 36,500 38000 Year 2 cash inflows 35000 45000 20000 Year 3 cash inflows 40000 40000 42000 Year 4 cash inflows 38000 35000 45000 Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. TO dO Create a spreadsheet to answer the following questions: Calculate the firm‘s cost of capital ( WACC) Calculate the payback period for each project. Calculate the net present value (NPV) of each project,…Juhayna Food Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flow Project A Project B Project C Initial Investment 100000 120,000 130,000 Year 1 Cash Inflows 30000 36,500 38000 Year 2 cash inflows 35000 45000 20000 Year 3 cash inflows 40000 40000 42000 Year 4 cash inflows 38000 35000 45000 Year 5 cash inflows 20000 30000 50000 Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long-term debt 30% , preferred stock 20% and common stock equity 50%. payback period: project A YEAR OF FULL RECOVERY = 3project B full recovery=2+38500040000=2.963 YEARSproject c full recovery=3+3000045000=3.67 YEARSNPV: project A: 18656.93 project B: 16200.16 project C: 6736.876…Dundonald Inc. has identified an investment project with the following cash flows. If the discount rate is 8%, what is the future value of these cash flows in year 4? What is the future value at a discount rate of 11%? At 24%? Year Cash Flow 1 $1,375 2 1,495 3 1,580 4 1,630
- 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…Armaan Incorporation, has two investment proposals, which have the following characteristics:PROJECT A PROJECT BPERIODCOSTPROFIT AFTER TAXNET CASH FLOWCOSTPROFIT AFTER TAXNET CASH FLOW 0$9,000--$12,000-- 1 $1,000$5,000 $1,000$5,000 2 $1,000$4,000 $1,000$5,000 3 $1,000$3,000 $4,000$8,000 For each project, compute its payback period, its net present value, and its profitability index using a discount rate of 15 percent.Creditpoint LLC has received the following information for a Project The Present Value of Cash Inflow is OMR 10000 The Present Value of Cash Outflow ( Investments) is OMR 7000 What is the Net Present Value of the Project?
