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- Expected Cash FlowsYear Project A Project B0 -400 -5751 95 1502 110 2003 118 2504 125 2755 140 2306 150 180a. If you were told that each project’s cost of capital was 10%, which project should be selected using the NPV criteria?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…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 steps
- (b) In order to choose between Project A and Project B, the project planner must make a decision. The following data pertains to the projects: Project P Project Q Capital cost of asset 60,000 60,000 Profits before depreciation Project A Project B Year 1 20,000 50,000 Year 2 30,000 20,000 Year 3 40,000 5,000 Year 4 50,000 5,000 Year 5 60,000 5,000 (i) From the analysis using payback period method, which project will be more preferred? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Adjusting for Risk Bikes-B-Rode has performed a risk assessment of independent projects. They adjust for project risk by raising the calculated IRR by 2% for low risk projects, leaving the IRR the same for moderate risk projects, and lowering the calculated IRR by 3% for high risk projects. Without capital rationing, and given their cost of capital of 10%, which projects should Bikes-B-Rode accept? Why? Risk Project Cost NPV IRR Level A $16,000 $ -1,000 8% Low B $28,000 $ 4,000 13% Low C $34,000 $ 4,000 12% Average D $42,000 $ 5,000 12% HighA company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below: Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued? Why?
- Managerial Accounting (Please help ASAP. Solutions only. Rate will be given) ABC Corporation is considering the following three investment projects: Project P Project Q Project R Investment required 15,000 50,000 71,000 Present Value of Cash Inflows 15,150 54,500 75,970 The only cash outflows are the initial investements in the projects. a. Determine the Project Profitability Index of Project P? b. Determine the Project Profitability Index of Project Q? c. Determine the Project Profitability Index of Project R?Requirments (a) Calculate the, the Payback Period, and the net Present Value of for each project.b) For each of the above methods of project appraisal recommend which project should be taken up. c) Using all the information gathered from the above techniques which project would you recommend giving the reasons for this decision. d) Explain the uses, limitations and merits of the Payback Period compared to Net Present Value in investment appraisal.Salalah company management is considering two competing investment Projects A and B.YearInitial Investment 12345Project A 8000 2750 2750 2750 2750 2750Project B 8000 3000 3000 3000 3000 3000DISCOUNT RATE 5.05%Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique.Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
- Salalah company management is considering two competing investment Projects A and B.YearInitial Investment 12345Project A 8000 2750 2750 2750 2750 2750Project B 8000 3000 3000 3000 3000 3000DISCOUNT RATE 5.05%Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?Consider the following two sets of project cash flows:Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6DiscountRateX -903 175.6 169.8 201.4 251.5 299.2 305.2 0.1037Y -513 190.5 195.5 90.5 80.5 85.5 110.5 0.1037A) Assume that projects X and Y are mutually exclusive. The correct investment decision andthe best rational for that decision is to:i) invest in Project Y since IRRY > IRRX.ii) invest in Project Y since NPVY > NPVX.iii) neither of the above.B) What are the incremental IRR and NPV of Project X?C) Is the use of the incremental measures in B) appropriate to your evaluation of thepreferred project? Explain.D) Which is the preferred project? Explain and justify the basis for your choice.(6 marks)2) Due to the demands of the new ATO Single Tough Reporting System, a successful manufacturingcompany is assessing the introduction of a new computer system to improve regulatory reportingcompliance. The managing director wants to install a new Pay Perfect system, whereas the…Which one of the following indicates a project should be accepted? 1. NPV = -$2,281 2. IRR = 13.8 percent; Required return = 14.5 percent 3. Discounted payback = 3.41 years; Required discounted payback = 3 years 4. None of the above
