Compare the following two mutually exclusive projects on the basis of Accounting Rate of Return (ARR). Cash flows and salvage values are in thousands of ringgit. Use the straight line depreciation method. Year Cash Outflow Cash Inflow Salvage Value Year 0 -250 Project A 1 91 Project B 2 130 3 105 10
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- Question 13 Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (ii)Calculate the taxable cash flows for years 1-3Question 17 Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (vi) What is the NPV of the project?Question 9 (Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project: Investment in equipment.................................. $150,000 Annual cash flows........................................... $40,000 Salvage value of equipment............................. $0 Life of the equipment....................................... 10 years Required rate of return.................................... 10% The company uses straight-line depreciation on all equipment. Required: (ii) Calculate the IRR
- Question 10 (Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project: Investment in equipment.................................. $150,000 Annual cash flows........................................... $40,000 Salvage value of equipment............................. $0 Life of the equipment....................................... 10 years Required rate of return.................................... 10% The company uses straight-line depreciation on all equipment. Required: (iii) Calculate the ARRQuestion 11 (Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project: Investment in equipment.................................. $150,000 Annual cash flows........................................... $40,000 Salvage value of equipment............................. $0 Life of the equipment....................................... 10 years Required rate of return.................................... 10% The company uses straight-line depreciation on all equipment. Required: (iv) Is this a viable project?Question content area top Part 1 (IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $13,000 resulting in a single free cash flow of $17,165 after 9 years b. An initial outlay of $13,000 resulting in a single free cash flow of $46,394 after 15 years c. An initial outlay of $13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of $13,000 resulting in a single free cash flow of $13,653 after 4 years
- 4b1) Changes in the net working capital requirements: A. can affect the cash flows of a project every year of the project's life B. only affect the initial cash flows of a project C. only affect the cash flow at time zero and the final year of a project D. are generally excluded from project analysis due to their irrelevance to the total project 4b4) The cash flows of a new project that come at the expense of a firm's existing projects are: A. Salvage value expenses. B. Net working capital expenses. C. Sunk costs. D. Side effects or Externalities costsQuestion 16 Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (v) What is the tax incurred on the salvage value in year 5?Question three For each of the following projects compute (i) pay-back period, (ii) post payback profitability and (iii) post-back profitability index Initial outlay 50,000,000 Annual cash inflow (after tax but before depreciation) Shs .10,000,000 Estimated life 8 Years Initial outlay 50,000,000 Annual cash inflow (after tax but before depreciation) First three years Shs .15,000,000 Next five years Shs. 5,000,000 Estimated life 8 Years Salvage Shs. 8,000,000
- Question 1 Downtown Plc is in the process of evaluating two alternative projects, which are mutually exclusion. The projects will both required two different manufacturing machines and, both machines will have no residual values at the end of the project. Due to certain restrictions, only one of the two projects can be implemented. The following estimated cash flows over the life of the two projects are provided below: Cash Flows Year Project A Project B £(millions) £’(millions) 0 -600 -650 1 250 200 2 250 200 3 250 300 4 100 250 The company’s cost of capital is 10%. Calculate the net present value (NPV) of both projects and recommend with reasons which project should be implemented byThere are two proposals of investment, the estimated financial data related to these proposal as following Proposal A Proposal B Initial Investment $350000 $180000 Cash Inflow: year 1 $100000 $50000 Year 2 $120000 $50000 Year 3 $150000 $50000 Year 4 $90000 $50000 Year 5 $30000 $50000 Required Rate on return (RRR) 10% 10% All payment of inflows is at the end of accounting period while investment is paid at beginning of period, straight line method of depreciation is used Answer Below Questions Profitability index of Proposal B Answer 1 Payback period in years and months of Proposal B Answer 2 Rank the proposals based on Lowest Payback Period Answer 3 Profitability index of Proposal A Answer 4 Simple Rate on Return of Proposal A Answer 5 Payback period in years and months of proposal A Answer 6 Internal Rate on Return of Proposal B (IRR) Answer 7 PV…Question 8 (Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project: Investment in equipment.................................. $150,000 Annual cash flows........................................... $40,000 Salvage value of equipment............................. $0 Life of the equipment....................................... 10 years Required rate of return.................................... 10% The company uses straight-line depreciation on all equipment. Required:(i) Calculate he payback period