calculate the Net present value for all three projects, the WACC (discount factor) is 4.25% pick which project is the best one, please show all your working out if possible thankyou and have a nice day :) Project summaries (£'000 unless stated otherwise)The projects all have a limited lifespan and are indivisible. The key figures from theproject proposals are:Project AProject BProject CProject life (years)Capital expenditure in toResidual valueAdditional working capitalAnnual revenuesGross profit %Additional annual fixed costs200,00060,00060,000300,00045%40,000250,00070,00050,000425,00042%70,000400,000200,000100,000475,00047%80,000Mashaba plc's shares have a par value of £0.20. The loan notes have a marketvalue equal to their nominal value.Mashaba plc's policy is to depreciate capital expenditure in equal amounts over theestimated useful life of the asset. This policy matches the tax regulations that alsostate that tax must be paid at the appropriate rate on accounting profits on the lastday of the year in which they are earned.

Net present value refers to the difference between the net cash inflows and cash outflows in a…

Answered: Net present value f

Business

Finance

Net present value f

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

calculate the Net present value for all three projects, the WACC (discount factor) is 4.25% pick which project is the best one,

please show all your working out if possible

thankyou and have a nice day :)

Project summaries (£'000 unless stated otherwise)
The projects all have a limited lifespan and are indivisible. The key figures from the
project proposals are:
Project A
Project B
Project C
Project life (years)
Capital expenditure in to
Residual value
Additional working capital
Annual revenues
Gross profit %
Additional annual fixed costs
200,000
60,000
60,000
300,000
45%
40,000
250,000
70,000
50,000
425,000
42%
70,000
400,000
200,000
100,000
475,000
47%
80,000
Mashaba plc's shares have a par value of £0.20. The loan notes have a market
value equal to their nominal value.
Mashaba plc's policy is to depreciate capital expenditure in equal amounts over the
estimated useful life of the asset. This policy matches the tax regulations that also
state that tax must be paid at the appropriate rate on accounting profits on the last
day of the year in which they are earned.

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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