Consider the project balances in following Table for a typical investment project with a service life of four years. Cash Project Period Flow Balance $ (5,200) $ (5,200) $ (3,780) $ (547) $ 3,771 $ 3,600 $ 7,937 2. 3. Determine the interest rate used in computing the project balance. O 1496 10% 896 None of these
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- The following table contains a summary of expected changes to a project's balance over its five-year service life at 10% interest. Which of the following statements is incorrect?(a) The required additional investment at the end of period 1 is $500.(b) The net present worth of the project at 10% interest is $1,242.(c) The net future of the project at 10% interest is $2,000.(d) Within two years, the company will recover all its investments and the costof funds (interest) from the project.Company A has provided figures for two investment projects, only one of which may be chosen. These are the calculations based on the figures: Payback Period The Accounting Rate of Return / Return on Capital Employed Net Present Value Project A 2 years 4 months 27.08% £63,705 Project B 2 years 7 months 39.47% £74.971 Analyse and provide recommendations as to what project needs to be chosen based on the calculations above.A project requires an initial investment of 45,000$, has a salvage value of 11,000$ after six years, incurs annual expenses of 9,000$, and provides an annual revenue of 16,000$. Using MARR of 10%, determine the AW of this project detailed answer without using excel
- The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project Z Amount of investment $64,000 $84,000 Useful life 4 years 9 years Estimated residual value 0 0 Estimated total income over the useful life $8,960 $43,470 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A % Project Z %The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project Z Amount of investment $64,000 $48,000 Useful life 4 years 5 years Estimated residual value 0 0 Estimated total income over the useful life $8,960 $12,600 Determine the expected average rate of return for each project. Round your answers to one decimal place.Consider the following financial data for an investment project:• Required capital investment al n = 0: $ 100,000• Project service life: I 0 yea rs• Salvage value at N = I 0: $15,000• Annual revenue: $150.000• Annual O&M costs (not including depreciation): $50.000• Depreciation method for tax purpose: seven-year MACRS• Income tax rate: 40%.Determine the project cash flow at the end of year lO.(a) $69.000(b) $73.000(c) $66.000(d) $67.000
- The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life. Capital investment is $1,000,000 Cost of depreciable property which is part of $1,000,000 total estimated project cost is $650,000 Depreciable property is categorized in CCA 30% class with 50% rule applicable. Project analysis period is 3 years Annual operating and maintenance expenses are $636,000 in first year and increase at 5% rate per year Company expects to make $1,250,000 of revenue from sales of new product Salvage value of depreciable property at end of 3 years is $280,000 Corporate taxes are 40% MARR is 15% per year Calculate a 3-year cash flow statement then calculate using excel, Net Present Value of the project IRRA project has a first cost of S120,000 and an estimated salvage value of $20,000 at the end of 25 years. Estimated average annual receipts are 527,900. Estimated average annual disbursements for everything except income taxes are 515,060. Estimated average annual disbursements for income taxes are 54,420. Assuming that annual receipts and disbursements will be uniform throughout the 25 years, analyze the above data and compute internal rate of return. Comment whether this project is viable if the Bank offer an interest rate of 8% on loan.REQUIRED Study the information given below and calculate the Accounting Rate of Return on initial investment (expressed to two decimal places) of each project. INFORMATION The following data relate to two investment projects, only one of which may be selected: Project A Project B R R Initial capital expenditure 180 000 180 000 Net cash inflow per year: Year 1 90 000 36 000 Year 2 72 000 36 000 Year 3 54 000 86 000 Year 4 36 000 94 000 Expected scrap value (not included in the figures above) 36 000 0 Note: Depreciation is calculated using the straight-line The cost of capital is 15%. REQUIRED Use the capital asset pricing model to calculate the cost of the ordinary shares from the information provided below. INFORMATION The financial managers of Computex have…
- The following is a cost / revenue estimates of a project: Initial investment $50,000 Annual revenue 20,000 Annual operating cost 2,500.. Salvage value@EOY 10,000 Study period 5 years MARR 20% per year Determine whether the project is profitable using the PW method .Consider the following project balances for a typical investment project with athe service life of five years: (a) Fill in the blanks by constructing the original cash flows of the project anddetermining the terminal balance.(b) Determine the interest rate used in the project-balance calculation, andcompute the present worth of this project at the computed interest rate.Consider the following project balances for a typical investment project with aservice life of four years: (a) Construct the original cash flows of the project.(b) Determine the interest rate used in computing the project balance.(c) Would this project be acceptable at a MARR of 12%?