Background: There are 3 investment projects faced by the ABC company. Given the decision tree, which project should ABC undertake? 0.17 $30,000 $3,20 0.2 $10,000 0.6 $-7,000 Project 1 $1,40 0.8 $2,000 Project 2 0.2 $-1,000 Project 3 $5,000 1000

Background: There are 3 investment projects faced by the ABC company. Given the decision tree, which project should ABC undertake? 0.17 $30,000 $3,20 0.2 $10,000 0.6 $-7,000 Project 1 $1,40 0.8 $2,000 Project 2 0.2 $-1,000 Project 3 $5,000 1000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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ABC Limited Company is looking to invest in aproject. The cost of that project is $60,000 and the cash inflows and outflows of the project for 5 years, are shown in Table 1 below. The company’s WACC is 7%. Years Cash InflowsCash Outflows0 (Initial Outlay) $60,000.001 $20,000.00 $5,000.002 $21,000.00 $2,000.003 $22,000.00 $2,000.004 $14,000.00 $2,000.005 $10,000.00 $1,000.00 Profitability Index (PI) ii. Net Present Value (NPV), and estimate the Internal Rate of Return (IRR) of the Project using the given interest rate and 9%.
Jerry Lee loves sports. He has just finished up a degree in sports marketing at Sunway University in Kuala Lumpur and to his great pleasure, he is in the first month of his dream job, a sales person (the title is account manager) for small- and medium-sized accounts for the Harimau Sports Malaysia (his favourite football team). In general, he will be responsible for developing new customer relationships with companies in Kuala Lumpur and the surrounding area, as well as working on enhancing relationships with firms that are already loyal customers of the Harimau. His “product” is blocks of seats, special boxes and events at historic Shah Alam National Sports Complex, as well as Harimau promotions that can be held at various places of businesses as a marketing campaign for the customer’s business.The problem (actually its more of an opportunity) is this is a brand new position. Over the years the team has had a major account position, similar to the one Jerry now has, but more focused…
CVP Analysis Lawn Master Company, a manufacturer of riding lawn mowers, has a projectedincome for the coming year as follows:Sales $46,000,000Operating expenses:Variable expenses $32,200,000Fixed expenses 7,500,000Total expenses 39,700,000Operating profit $ 6,300,000Required1. Determine the breakeven point in sales dollars.2. Determine the required sales in dollars to earn a before-tax profit of $8,000,000.3. What is the breakeven point in sales dollars if the variable expenses increases by 12%?
Suppose you have a choice of three projects to choose from. Here the expected profits from these projects under the following economic scenarios: Project Poor/Fair Moderate/Stable Strong/Booming A -200 $400 $700 B -700 600 1200 C 100 500 900 Now suppose the probability of a Poor/Fair economy is 25%, a Moderate/Stableeconomy is 45% and there is a 30% chance for a Strong/Booming economy.A) Setup a decision tree.B) Determine the expected value (EV) for each project. What project shouldbe selected based on the expected value approach? Why?C) Determine the expected value with perfect information about the states ofnature?D) Determine the expected value without perfect information about the states ofnature?E) Determine the expected value of perfect information.
Consider an investment project with the following cash flows: N Cash Flow 0 -$5,0001 $02 $4,8403 $1,331ComputcthelRRforthisinvestment.lsthisprojectacceptablcatMARR = 10%?
Second consulting is considering undertaking several proposed projects for the next fiscal year. The projects, the number of engineers and support personnel required for each project, and the expected profits for each project are summarized in the following table: Project 1 2 3 4 5 6 Engineers required 20 55 47 38 90 63 Support personnel required 15 45 50 40 70 70 Profit ($1,000,000s) 1.0 1.8 2.0 1.5 3.6 2.2 There are 175 engineers available and 150 support personnel available for these projects. Further, no more than 3 projects can be done. Formulate an integer program to solve this problem. Define the decision variables needed to model this problem. The objective is to maximize profit. Give the objection function. Write the constraints. What is the final answer? Explain in detail.
Troop Inc. is considering building a factory in India. The estimated cash flows for the project are given below and management consider that a discount rate of 12% reflects the riskiness of the venture. The Indian government has agreed to purchase the factory at the end of three years operation for Rupees 250 million. Year 0 Year 1 Year 2 Year 3 Total cash inflows (Indian rupees (m)) 0 300 500 600 Total cash outflows (Indian rupees (m)) 800 220 230 280 Increase in US cash inflows (m) 0 2 2 2 Forecast exchange rate Rupees /$ 78.7 78.9 80 80.5 Required:a) Calculate the net present value of the project and advise whether Troop Inc should build the factory. b) Describe the factors Troop Inc. should consider when…
Troy and Tristan have decided to open a competitive Cheer and Dance business. Troy’s expertise is in business. He has a degree in Business Administration with a minor in Underwater Basket Weaving. Tristan, on the other hand, has a degree in Sports Management and has been coaching the Tesoro cheerleading team, while his girlfriend, Beatrix, has been coaching the dance team. The problem is that no one has much capital to invest. In fact, both are having a little trouble figuring out how they will be able to get the startup capital for the business. Fortunately, there are no other competitive Cheer and Dance companies in the area. Unfortunately, the potential buildings they have found to lease costs over $7,000 per month and they expect that utilities and water will cost approximately $650 per month. Liability insurance is expensive as well, estimated to be $2,000 per month due to possible injuries. What type of business organization should Troy ad Tristan adopt?
In theory, scenario analysis is a process of analyzing future events by considering alternative possible outcomes. Thus, scenario analysis, which is one of the main forms of projection, does not try to show one exact picture of the future. Instead, it presents several alternative future developments. Likewise, the Looking to the Future insert in Chapter 2, namely Scenarios on The Evolvement of National Cultures holds forth that managers must envision different scenarios on dimensions and dynamics of national cultures. Doing so prepares, does the reasoning, helps international managers improve the knowledge, skills, abilities needed to deal with ongoing cultural changes that influence the context of national markets, As noted in the Scenarios on The Evolvement of National Cultures, we focus our attention on four possibilities. Scenario 1: New Hybrid Cultures Will Develop and Personal Horizons Will Broaden Scenario 2: Although the Outward Expressions of National Culture Will…
Net Present Value Perform a financial analysis for a project using the Net Present Value method. Assume the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years 2, 3, and 4. (1) Use a 9 percent discount rate and round the discount factors to two decimal places. Calculate the NPV and the year in which payback occurs.(2) Explain in plain language what the NPV means in this context.
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Address the market structure classification of the Apple iPhone 6 plus. Guidelines for this assignment are listed below: Discuss which market structure best aligns with the Apple iPhone 6 plus. Align characteristics of the market structure to that of the Apple iPhone 6 plus. Discuss how price and quantity are determined for the Apple iPhone 6 plus. Identify other competitors in the market. Discuss whether or not any other competitors have influence over the market. State whether or not any competitors engage in price discrimination. Identify if the market for cellular phone aligns with game theory to include, a Prisoner's Dilemma. Include the following: 1 to 2-pages of content At least two sources