Calculate all three (see Problem 8.11) PW indexes (at i = 15%) for the following projects described in the table. What reason(s) are there to prefer one index over another? Each project is to be evaluated over 10 years. Project A B First cost(s) $30K $30K in year 0, $20K in year 1 $30K 10K O&M/year Revenue 13К 46K 20K 17K 53K Salvage 20K

Calculate all three (see Problem 8.11) PW indexes (at i = 15%) for the following projects described in the table. What reason(s) are there to prefer one index over another? Each project is to be evaluated over 10 years. Project A B First cost(s) $30K $30K in year 0, $20K in year 1 $30K 10K O&M/year Revenue 13К 46K 20K 17K 53K Salvage 20K

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

See similar textbooks

Similar questions

Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Dinaro Inc. is looking at an investment project that has an NPV of ($5,000). The hurdle rate is 8%.
Giorgio Co. is looking at an investment project with an internal rate of return of 10.8%. The initial outlay for the investment is $90,000. The hurdle rate or minimum acceptable rate of return is 10.2%.
Gama industry has the amount of $ 600000 for investment at MARR= 15%. The manager of this company considered three different projects with rates of return as project 1 = 24% , project 2 = 18% and project 3= 30%). these projects have initial investments as $100,000 ,$ 300000, and $200000 respectively. The overall rate of return will be: Select one: a. 0.23 b. 0.26 c. 0.45 d. 0.20
Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate cash flows of $49,500 per year for the next 8 years, at which time (end of Year 8) the company will pay $50,000 to another for clean-up and disposal. What is the Profitability Index (PI) of the project if shareholders demand a 16.295% return? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088.
Consider the following projects, X and Y where the firm can only choose one. Project X costs $1500 and has cash flows of $678, $652, $347, $111, $54, $16 in each of the next 6 years. Project Y also costs $1500, and generates cash flows of $738, $693, $405 for the next 3 years, respectively. WACC=11%.Plot NPV profiles for the two projects. Identify the projects’ IRRs on the graph.
Acme Mfg is considering two projects, A & B, with cash flows as shown below: period CFA CFB 0 -50,000 -100,000 1 20,000 60,000 2 20,000 25,000 3 20,000 25,000 4 20,000 25,000 The opportunity cost of capital for A is 14 percent. The opportunity cost of capital for B is 10 percent. What is the discounted payback period of Project A. Write your answer in years correct upto 2 decimal places
Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the incremental IRR (aka cross - over rate) for the two projects. (Enter percentages as decimals and round to 4 decimals). Year Project A Project B0-15,000,000-15,000,000 1 2,000,000 6,000,000 2 3,000,000 6,000,000 3 5,000,000 6,000,000 4 5,000,000 1,000,000 5 6,000,000 1,000,000
Hello, can you please answer this problem with excel and formulas, thank you! Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent. Year Project F Project G 0 –$135,000 –$205,000 1 60,000 40,000 2 50,000 55,000 3 60,000 90,000 4 55,000 120,000 5 50,000 135,000 a. Calculate the payback period whitout PV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 8,732.16) b. Calculate the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 8,732.16)c. Which project, if any, should the company accept? just write the letter.
Bausch Company is presented with the following two mutually exclusive projects. The required return for both projects is 20 percent. Year Project M Project N 0 –$139,000 –$356,000 1 63,600 152,000 2 81,600 181,000 3 72,600 137,000 4 58,600 111,000 a. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Which, if either, of the projects should the company accept?
You must decide firm which of the proposed projects should be accepted for the upcoming year since only $6 million is available. Which projects should be accepted? Project Cost (millions) NPV (millions) A 3.25 0.80 B 1.75 0.52 C 4.5 0.69 D 3.75 0.95 E 1.25 0.25 F 0.50 0.25