Initial Annual Annual Salvage Value Investment Investment Receipts Disbursements 1 $300,000 $205,000 $125,000 $50,000 $400,000 $230,000 $130,000 $50,000 3 $450,000 $245,000 $140,000 $60,000 4 $500,000 $260,000 $135,000 $75,000 5 $600,000 $290,000 $150,000 $75,000 2. In addition to the original opportunity statement, Bayer declares that investments 2 and4 are mutually exclusive, investment 5 is contingent on 2 being funded, and at least two investments must be made. d. Now, which alternatives should be selected by Bayer? e. What is the present worth for the resulting investment portfolio? f What is the resulting IRR? Again consider the original opportunity statement: g. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current limit on investment capital, (2) plus 20%, and (3) minus 20%. h. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current MARR, (2) a MARR of 12%, and (3) a MARR of 8%.

Initial Annual Annual Salvage Value Investment Investment Receipts Disbursements 1 $300,000 $205,000 $125,000 $50,000 $400,000 $230,000 $130,000 $50,000 3 $450,000 $245,000 $140,000 $60,000 4 $500,000 $260,000 $135,000 $75,000 5 $600,000 $290,000 $150,000 $75,000 2. In addition to the original opportunity statement, Bayer declares that investments 2 and4 are mutually exclusive, investment 5 is contingent on 2 being funded, and at least two investments must be made. d. Now, which alternatives should be selected by Bayer? e. What is the present worth for the resulting investment portfolio? f What is the resulting IRR? Again consider the original opportunity statement: g. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current limit on investment capital, (2) plus 20%, and (3) minus 20%. h. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current MARR, (2) a MARR of 12%, and (3) a MARR of 8%.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 8EP

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