Consider the following two projects: Projec Year 0 Year 1 Year 2 Year 3 Year 4 Cash Cash Cash Cash Cash Discount Flow Flow Flow Flow Flow Rate -100 40 50 60 N/A 0.11 -73 30 30 30 30 0.11 The net present value (NPV) of projectAs closest to Select one: a. 51.2 b. 25.6 c. 20.5 Od. 22.5
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- 1- Evaluate the following projects using the payback method assuming a rule of 3 yearsfor payback. Year Project A Project B 0 -10,000 -10,000 1 4,000 4,000 2 4,000 3,000 3 4,000 2,000 4 0 1,000,0006) 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?What is the “cross-over” rate of the following projects? Year Project A Project B 0 -1,400 -800 1 950 600 2 950 600
- What is the IRR of Project A? Year Project A 0 -3000 1 1000 2 1000 3 2500 18.54% 19.54% 23.54% 29.54% unansweredPROJECT A PROJECT BInitial Outlay -60,000 -80,000Inflow year 1 17,000 18,000Inflow year 2 17,000 18,000Inflow year 3 17,000 18,000Inflow year 4 17,000 18,000Inflow year 5 17,000 18,000Inflow year 6 17,000 18,000Determine the B/C ratio for the following project.First Cost = P100, 000Project life, years = 5Salvage value = P10, 000Annual benefits = P60, 000Annual O and M = P22, 000Interest rate= 15%
- NPV and project selection Project A Project B initial investment -50000 -60000 Year 1 5000 4000 Year 2 6000 7000 Year 3 7000 14000 Year 4 9000 13000 Year 5 4000 4000 Year 6 9000 9000 Year 7 5000 10000 Year 8 8000 8000 Year 9 9000 9000 Year 10 5000 7000 Calculate the NPV of each project with a 4% discount rate. Which project(s) will be undertaken if all are mutually exclusive (still 4% discount)? Which project(s) will be undertaken if all are independent and the firm only has $125k in available capital (still 4% discount)? Which projects will be undertaken if all are independent and the firm’s cost of capital is 3%? Please do in Excel and show stepsIf the opportunity cost is 11%, which of these projects is worth pursuing? Year Project A Project B 0 -$200 -$200 1 80 100 2 80 100 3 80 100 4 80Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the internal rate of return for Project B. (Enter percentages as decimals and round to 4 decimals). Year Project A Project B 0 -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
- The following information relates to two projects of which you have to select one to invest in.Both projects have an initial cost of $400,000 and only one can be undertaken.Project X YExpected profits $ $Year 1 160,000 60,000Year 2 160,000 100,000Year 3 80,000 180,000Year 4 40,000 240,000Estimated resale value atthe end of year 4 80,000 80,000i) Profit is calculated after deducting straight line depreciationii) The cost of capital is 16%Required:a) For both projects, calculate the following:i) The payback period to one decimal place ii) The accounting rate of return using average investments iii) The net present value iv) Advise the board which project in your opinion should be undertaken, givingreasons for your decision.The following information relates to machines A and B. Year Machine A Machine B Shs Shs 0 (100,000) (120,000) 1 60,000 50,000 2 40,000 50,000 3 20,000 50,000 Find the Internal Rate of Return (IRR) of the project at rates 10%)Calculate the MIRR for a project where the WACC is 6%. Invest: $95 today plus $30 at the end of year 2. Returns: $33, 40, 43, and 45 to be received at the end of years 1, 2, 3, and 4 respectively. (Draw a timeline and express your answer as a % carried to 1 decimal place.)