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- Firm 1 has £10,000 to invest. Firm 2 offers Firm 1 the following proposal: invest £10,000now and get £11,000 back in 12 months. The returns on this investment are guaranteed, and there are no other costs involved? What should Firm 1 do? b. Firm 1 is considering investing their profit into any of the following two projects. Investment appraisal techniques have been used, and the following results found: Project A Project B Internal Rate of Return 6% 8% Net present value 88000 61000 which project should Firm 1 select?Bill's income is $1,000 and his net taxes are $350. His disposable income is Group of answer choices $650. $750. $1,350. -$350.Calculation question: Suppose the following data accurately estimates the costs and benefits you outlined in #1. Calculate NPV assuming a discount rate of 4%. Should ISU invest in this project? Year Costs Benefits 0 1000 400 1 200 500 2 200 500 3 200 500
- a) What is the NPV of each project? Which projects should Xia undertake, and how much cash should it retain? b) What is the total value of Xia’s assets today? c) What cash flows will the investors in Xia receive? Based on these cash flows, what is the value of Xia today? d) Suppose Xia pays any unused cash to investors today, rather than investing it. What are the total cash flows to the investors in this case? What is the value of Xia now?A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?Cost component Alpha Beta Charlie development 100,000 immediately 150,000 year 1 10,000 immediately None Programming 45,000 immediately 35,000 year 1 45,000 immediately 30,000 year 1 None Operations 50,000 1-10 80,000 years 1-10 150,000 years 1-10 support 30,000 1-10 40,000 years 1-10 none If each system is expected to have a 10-year life, 1. calculate the net present value for each system if the cost of capital is 8%. 2. Specify which system should be selected and why
- What rent PSF would be needed to incentivize this development? Suppose new Class A Office developments cost $200 per square foot (psf), all in (i.e. land cost, construction, dev costs, reasonable dev profits) If the new building can be sold for $200 psf, development is feasible. Suppose investors are willing to pay $12.50 per dollar of (net operating) income on the building12. Which of the following statements is FALSE? A. We can use sensitivity analysis to identify important factors. B. Sensitivity analysis considers the effect on net present value (NPV) of changing multiple project circumstances. C. changing the cost of capital will change the investment decision. D. Estimates of the cash flows and cost of capital are often subject to significant uncertainty.1. Which of the following statements is incorrect?(a) Economic decisions are time invariant.(b) Time and risk arc are the most important factors in any investment evaluation.(c) For a large-scale engineering project, engineers must consider the impact of the project on the company’s financial statements.(d) One of the primary roles of engineers is to make capital expenditure decisions. 2 When evaluating a large-scale engineering project, which of the following items is important?(a) Expected profitability(b) Timing of cash nows(c) Degree of financial risk(d) All of the above 3. Which of the following statements defines the discipline of engineering economics most closely?(a) Economic decisions made by engineers.(b) Economic decisions related to financial assets.(c) Economic decisions primarily for real assets and service from engineering projects.(d) Any economic decision related to the time value of money. 4.Which of the following statements is not one of the four fundamental…
- 4. A business generates an annual income of$50,000and a salvage value of$500,000in 10 years. How much would you pay for this to havei=10%? 5. Determine IRR in problem 4 if you pay$490,000for the business. (percentage format) Answer ASAP with proper explanation .Suppose that the cost of an investment is €12000 and its return is €5000 per year for three years. At the end of the three years, the value of the equipment is zero. Calculate the net present value (NPV) if the discount rate is 5%. Give only a numerical answer with no symbols. Use a point (.) as a decimal separator and nothing as a thousand separator (e.g., 2325.37 and not 2.325, 37).A businessman is considering the purchase of a machine that is expected to be obsolete in 5years. The machine is worthP100,000. The prevailing rate of interest is 15%. His estimate of the annual gross incomes fromthe use of the machine isas follows:Year Income1 20,0002 25,0003 35,0004 30,0005 28,000Total = P138 999Should the businessman purchase the machine?