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- A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, will the firm accept the following project?CF0 = -$30,000CO1 = $20,000C02 = $14,000C03 = $11,000 yes or noWhich alternative should be selected using the incremental rate of return analysis, if MARR =11.0%? Do- nothing A B C D First Cost 0 $10,000 $4000 $10,000 $7000 Annual benefit 0 1,806 828 1,880 1,067 Life 10 Years ROR 12.5% 16.0% 13.5% 8.5% a. B, because its ROR is the highest b. Something other than C, because C costs the most initially c. C, because the C-B increment has a ROR of 11.78% and the A-B increment has a ROR of 10.5% d. C because C has the highest annual benefitA project you are considering is expected to provide benefits worth $225,000 in one year. If the risk-free rate of interest (rf) is 8%, then the value of the benefits of this project today are closest to: A) $190,333 B) $208,333 C) $225,000 D) $243,000
- If you invest £100 now and expect to receive £133.1 in 2 years time, what is the Internal Rate of Return of this project? a015% b)10% c)0% d)33%What is the approximate expected coefficient of variation (=CV) of returns for a projected one-year project that is 50%-50% probabilities to give +15% return as it is to provide a 5% loss (-5%)? (Please Show Work) A) 0 B) 25 C) 5 D) 2 E) 3Complete the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR=15%per year. "Do Nothing" is not an option. A B C D Capital investment $15,000 $15,900 $13,500 $18,000 Annual costs 240 310 450 90 Market value at EOY 10 900 1,250 1,750 2,000 FW (15%) −$64,656 −$69,369 ??? −$72,647 The FW of the alternative C is ... nothing.(Round to the nearest dollar.) Select the preferred alternative. Choose the correct answer below. A. Alternative D B. Alternative B C. Alternative C D. Alternative A
- You estimate that a planned project for your company has a 0.3 chance of tripling the investment in a year and a 0.7 chance of halving the investment in a year. What is the standard deviation of the return on this project? A.1.5625 B.1.3126 C.1.2247 D.1.1457Compute the traditional payback period (PB) and the discounted payback period (DPB) for a project that costs $329,000 if it is expected to generate $94,000 per year for five years? The firm’s required rate of return is 12.5 percent? Should the project be purchased?2. Your firm is considering the following 3 mutually exclusive alternatives. Interest rate is10%. A B CInitial Cost $35,000.00 $21,000.00 $42,000.00Annual Benefit $4,200.00 $3,300.00 $5,000.00Salvage value 0 $1,000 $1500Project life Forever 20 year 50 a. Calculate the Benefit-Cost ratio of each projectb. Which of the 3 alternatives should be selected using B/C ratio analysis (show yourwork)?
- How much would you invest today in order to receive $30,000 in each of the following independent scenarios: 10 years at 9% 8 years at 12% 14 years at 15% 24 years at 10% Use the appropriate EXCEL spreadsheet in the Chapter11 TVOM Examples.xlsx downloadto complete the following table: Present Value (PV) Rate Time (Years) Future Value (FV) A 9% 10 $30,000.00 B 12% 8 $30,000.00 C 15% 14 $30,000.00 D 10% 24 $30,000.00 PLEASE NOTE: All dollar amounts will be with "$" and commas as needed and rounded to two decimal places (i.e. $12,345.67). Use the present value of $1 table in the Appendix B PV FV Tables downloadand verify that your answers above are correct: Future Value (FV) Rate Time (Years) FV Factor (from Table) Present Value (PV) A $30,000.00 9% 10 B $30,000.00 12% 8 C $30,000.00 15% 14 D $30,000.00 10% 24 PLEASE NOTE: All PV Factors will be rounded to three decimal places (i.e. 1.234). All dollar amounts will be with "$" and…The NPV of a project is $8,000. If the IRR is 12%, which of the following is the required rate of return for the project? Group of answer choices A.12.00% B.none of these are possible answers C.15.97% D.11.75%Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year revenue/ product s revenue/ product v0 (150,000) outlay (150000) outlay1 14000 150002 24000 253333 44000 520004 84000 63333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?