1- Calculate the internal rate of return for the following investments: Initial Cost Annual Benefit Answer: 14.87% Operations and Maintenance Salvage Value Useful Life $-10,000 $6,000 $4,000 $5,000 8 years
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- A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.225 Mr. H Salt purchased an 1/8 interest in a producing oil well for $45,000. Recoverable oil reserves for the well were estimated at that time at 15,000 barrels, 1/8 of which represented Mr. Salt's share of the reserves. During the subsequent year, Mr. Salt received $12000 as his 1/8 share of the gross income from the sale of 1000 barrels of oil. From this amount, he had to pay $3000 as his share of the expense of producing the oil. Compute Mr. Salt's depletion allowance for the year.Profit is $132 000, accounts payable increased $10 000 during the year, inventory decreased $6000 during the year, and accounts receivable increased $12 000 during the year. Using the indirect method, what is net cash provided by operations?a. $104 000.b. $116 000.c. $124 000.d. $136 000.
- 4) Which of the following power plants is better investment, assuming 8% interest on the sinking fund and no salvage value in either case, taxes/insurance at 10% and interest on capital at 12%. Use ROR and Present Worth Method. - Coal plant which costs P1M, last 10 years and cost annually P100k to operate. - Fuel-oil plant which costs P800k will last 7 years and cost annually P70k to operate.Firm 1 has £10,000 to invest. Firm 2 offers Firm 1 the following proposal: invest £10,000now and get £11,000 back in 12 months. The returns on this investment are guaranteed, and there are no other costs involved? What should Firm 1 do? b. Firm 1 is considering investing their profit into any of the following two projects. Investment appraisal techniques have been used, and the following results found: Project A Project B Internal Rate of Return 6% 8% Net present value 88000 61000 which project should Firm 1 select?Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? iii. What will be the market value of merged company (Cfood after the acquition of Tfood) under the cash offer?
- Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? v. What is the cost of merger under stock offering? Also compute the merger's NPV for Cfood's original shareholders. i. What is the economic gain from the merger? ii. What…BOND PROBLEM: $1675 bond matures in 16.5 years. Coupon rate 3.39%. Payment made biweekly. R= 4.89%. After 5 -years coupon rate becomes 22% and payment made weekly. R=13%. What is your RATE OF RETURN over the years (ROR)?Consider a project that will bring in upfront cash inflows for the first two yearsbut require paying some money to close the project in the third year. A0 A1 A2 $6500 $4500 $13000 This is a simple borrowing project. Determine the borrowing rate of return
- Nu Things, Inc., is considering an investment in a business venture with the following anticipated cash flow results: EOY Cash Flow 0 -$95,000 1 $28,000 2 $27,000 3 $26,000 4 $25,000 5 $24,000 6 $23,000 7 $22,000 8 $21,000 9 $20,000 10 $19,000 11 $18,000 12 $17,000 13 $16,000 14 $15,000 15 $14,000 16 $13,000 17 $12,000 18 $11,000 19 $10,000 20 $9,000 Assume MARR is 20% per year. Based on an external rate of return analysis: Part a Determine the investment's worth: % Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2.! Pls answer All ! Engineering Economics Questions (bartleby = 3 max questions)1. Sarah wishes to turn her P 10000 investment into P 100000 in 20 years. How much interest doesshe need to receive compounded annually to reach her goal? 2. Gio promised to pay Php 36000 at the end of 90 days. He was offered a 12% discount if he paysin 30 days. Find the rate of interest. 3. What is the uninflated present worth of a Php 200,000 future value in two years if the averageinflation rate is 6% and interest rate is 10%Financial information about a dam project is presented in the table below. Initial investment cost ($) 340,000 Operation-maintenance expenses (annual) ($) 57,000 High repair-maintenance cost (at 10th year) ($) 411,000 Salvage value ($) 44,000 Economic life of the dam 25 years Annual interest rate 15% The kilowatt hour (kWh) of electricity will be sold at $0.45. Under these conditions, how much electricity should the dam produce annually to cover the construction costs?