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#28 Payback &
A project has a life of 10 tears and a payback period of 10 years. Is the project NPV positive or negative.
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- 8-9 Given the following information for projects X and Y, which one should be chosen and why? Project X Project Y Net present value $2,00,000 $3,000,000 Project life 5 years 8 years Required return 10% 10% Select one: a. Choose Project X, as it has a lower equivalent annual cost than Project Y. b. Choose Project Y, as it has a lower equivalent annual cost than Project X. c. Choose Project Y, as it has a higher equivalent annual benefit than Project X. d. Choose Project X, as it has a higher equivalent annual benefit than Project Y. e. Choose Project Y, as it has a higher net present value than Project X.4(25). Some data is given about a project below: Life = 3 years Cost of Project now = 100 Cash inflows for next 2 years is 80 tl every year. However, at the end of the third year he has to spend 10 tl for the repairs. a. (15). What is the profitability of the Project? b. (10) . How will he decide on the Project?7. Find the Rate of Return (IRR-Ch 16.3) over 8 years on a project that cost $250,000 today and $100,000 in 3 years but will return (inflow) a net income $70,000 at the end of the year over 8 years. Further, there will be a special cash inflow of $50,000 at the end of year 8.
- Week 7 Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the projects are provided below. Project 1 Project 2 Cost $175,000 $185,000 Future Cash flow Year1 76,000 87,000 Year2 83,000 78,000 Year3 67,000 69,000 Year4 65,000 65,000 Year5 55,000 57,000 Required: a) Identify which project should the company accept based on NPV method. (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification) b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years. c) Which project Giant Machinery should choose if two methods are in conflict.4 You are considering the following investment activity. The facts are the following: Required investment 300,000.00 Discount Rate 9% Life of project 7.00 Years Net income for the project Sales 140,000.00 Expenses Material 25,000.00 Labor 35,000.00 Overhead 15,000.00 Total Expenses 75,000.00 Net Income 65,000.00 What is the NPV of this investment? What is the IRR of this investment? Would you fund this project? Show your work below Year 0 1 2 3 4 5 6 711. I need help with finance home work question A company is considering a 7-year project. At the beginning of the project, a cash outflow in the amount of $340,000 would be required. The company expects the project would generate cash inflows in the amount of $70,000 at the end of each of the project's 7 years. Assume the company requires a return of 8%. What NPV does the company expect for this project?
- Question 10 An investment has an initial cost of $410,000 and will generate the net income amounts shown below. This investment will be depreciated straight line to zero over the 4-year life of the project. Should this project be accepted based on the average accounting rate of return if the required rate is 16 percent? Why or why not? Year Net Income 1 $21,000 2 24,800 3 37,500 4 45,000 Group of answer choices Yes; because the AAR is greater than 16 percent No; because the AAR is less than 16 percent Yes; because the AAR is less than 16 percent Yes; because the AAR is equal to 16 percent No; because the AAR is greater than 16 percent7) A project has an initial cost of $40,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 10%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places. _____%3. A project requires an initial investment of $8000. It is expected to generate $1000 at the end of year 1, $2000 at the end of year 2, $3000 at the end of year 3, and $4000 at the end of year 4, which is when the project will terminate. At what required rate of return will you accept the project?
- 21. Consider a project that costs $250 now and is expected to generate $98 in net revenues at the end of each of the next three years. If the MARR is 5%, the future worth of this project is __________. A. $18.24 B. $19.54 C. $22.33 D. $18.29 23. Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine X? A. -$28,563 B. -$25,852 C. -$32,085 D. -$22,3185) A project has an initial cost of $50,000, expected net cash inflows of $9,000 per year for 10 years, and a cost of capital of 10%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent. ______$5 Cutting Edge Sensors Ltd. has taken $2.5M worth of investor stock to start a 3 year project that is estimated to earn $5M by the end of the project ($2M at end of year 2, and $3M at the end of year 3). The yearly costs involved are $500,000 for the length of the project. Investors had the opportunity to invest in another project expected to earn 10% per year.