C9123 Question 1:COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV)45 Project A6 Required7 Outflow8 Inflow9 Net InflowLO NPVInterest rateYear 0Year 1Year 2Year 3Year 5Year 6Total15%($700,000)$225,000$225,000$225,000$225,000$225,000$225,000$225,000$225,000($700,000)$225,000 1,125,000.00$429,000$225,000$54,234.901L23 Project B4 Required5 Outflow6 Inflow15%($400,000)$110,000$110,000$110,000$110,000$110,000$110,000$110,000$110,000$110,000$110,000($400,000)$550,000$150,0007 Net Inflow8 NPV($31,262.94)Based on the information above, identify which project (Project A or B) should be accepted? Explain why. Bychanging the figures in the excel template (above), assume the interest rate for Project A fell to 13%, and Cashoutflow (The initial investment) was $950,000, Cash Inflows was $350,000 per annum for the 6 years, and Netinflows was also $250,000. For Project B, assume interest rate also fell to 13% but Cash outflow, Inflow and NetQuestions:AnswerInflows remain the same. What is the new NPV for each of the project? Would you receommend that any of these2001Sheet1ReadyPs

Net Present Value: It is the present worth of the annual cash flows including the initial cost of…

Answered: Based on the information above,…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter2: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 14SP

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V5. Determine the capitalized cost for an asphalt road that will require a construction cost of P10M, P50 000.00 each year-end for maintenance, plus an expenditure of P1M every four years for repayment. Money is worth 5% effective. (ANSWER:. P15,640,236.65) PLEASE USE AN ACTUAL FORMULA NOT EXCEL
Question 15 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project: A B C . Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500…
E10.21 (LO3) (Government Grants) Rialto Group received a grant from the government of £100,000 to acquire £500,000 of delivery equipment on January 2, 2019. The delivery equipment has a useful life of 5 years. Rialto uses the straight-line method of depreciation. The delivery equipment has a zero residual value. Instructions A. If Rialto Group reports the grant as a reduction of the asset, answer the following questions. 1. What is the carrying amount of the delivery cquipment on the statement of financial position at December 31I, 2019? 2. What is the amount of depreciation expense related to the delivery equipment in 2020? 3. What is the amount of grant revenue reported in 2019 on the income statement? B. If Rialto Group reports the grant as deferred grant revenue, answer the following questions. 1. What is the balance in the deferred grant revenue account at December 31, 2019?…
Question 16 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project: A B C . Initial cost R100 000 R115 000 R90 000 Expected life 5 years 5 years 4 years Scrap value R5 000 R7 500 R4 000 Cash-inflows R R R End year 1 40 000 50 000 27 500 2 35 000 35 000 32 500…
6) Year Project A Project B Difference 0 -75000 -75000 0 1 26300 24000 2300 2 29500 26900 2600 3 45300 51300 -6000 Crossover rate 14.60% Hi I need help with the following question! Thank you! Are you going to accept project A or project B? Why?
consider project D. calculate the payback period project c0 c1 c2 c3 D -372,000 200,000 140,000 72,000
Question 21 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project:                                         A                                 B                                C      . Initial cost                               R100 000                    R115 000                    R90 000 Expected life                               5 years                         5 years                         4 years Scrap value                               R5 000                        R7 500                          R4 000 Cash-inflows                                  R                                 R                                 R End year 1                                   40 000                         50 000                        27 500                2                                   35 000                         35 000                        32 500…
Question 3 The following information relates to three possible capital expenditure projects. Because of capital rationing only one project can be accepted. Project:                                         A                                 B                                C      . Initial cost                               R100 000                    R115 000                    R90 000 Expected life                               5 years                         5 years                         4 years Scrap value                               R5 000                        R7 500                          R4 000 Cash-inflows                                  R                                 R                                 R End year 1                                   40 000                         50 000                        27 500                2                                   35 000                         35 000                        32 500…
A4 9a We find the following information on NPNG (No-Pain-No-Gain) Inc.: A4 9a EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000 These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future: EBIT: 20%Depreciation: 10%Change in net working capital: 15%Net capital spending: 10% The firm’s tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%.                                                                a. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years.
QUESTION 5Read the information below and answer the following questionsINFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you:PROJECT COS PROJECT TANNet Profit Net ProfitYear R R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method.5.4 Benefit Cost Ratio of Project Cos (expressed to three decimal places). 5.5 Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION.
Fix=sum(D3:D9) Based on the risk of each project, the company has a required rate of return of 11%. -800,000, 220,000, 265,000, 292,000, 317,000
The project's NPV? WACC: 10.00% Year 0 1 2 3 Cash flows -$1,000 $450 $460 $470

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