5 Remaining Time: 4 hours, 57 minutes, 03 seconds.* Question Completion Status:O. Option A is preferable as it has a shorter payback periodOd. We do not have sufficient information to decide which option is betterDe. We do have sufficient information to decide which option is betterQUESTION 4For the investment of the following table, pick the correct option assuming that the opportunity cost of the capital equals 3.5%.Year 1Year 2Year 3Year4Year 5Revenues4025324650Costs4020344850The InvestmentO a. is financially sustainable only in years 1 and 2O6.is financially sustainable only in years 1, 2 and 5Oe is financially sustainableOd is not financially sustainablee we can't say if it is financially sustainableQUESTION 5

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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7. For the four independent projects shown, one or those that will be selected using a MARR of 14% per year is if it is known that the rate of return for Project A = 14% per year, B = 12% per year, C = 15% per year, and D = 10% per Year A. Only Project C B. Projects A and C C. A project D. Can't be determined, need an incremental value Please solve based the option max 20 minutes ASAP
For the following table, assume a MARR of 15% per year and a useful life for each alternative of eight years which equals the study period. The rank-orderof alternatives from least capital investment to greatest capital investment is Z → Y → W → X. Complete the incremental analysis by selecting the preferred alternative. “Do nothing” is not an option. Solve, (a) Alternative W (b) Alternative X (c) Alternative Y (d) Alternative Z.
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. Use this information to solve, Using a MARR of 15%, the PW of the investment in A when compared incrementally to B is most nearly: (a) −$69,000 (b) −$21,000 (c) $20,000(d) $61,000 (e) $53,000.
An investment with a 3year life and a cost of #120000 generates revenue of #25000 in year1 #45000 in year2 and #65000 in year3. If the discount rate is 8% (i) what is the NPV of the investment. (ii) state whether the investment should be accepted or not and why. (Using the 12% as your second discount rate to solve the remaining part of the question under IRR.
Complete 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
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: –$1,700 $630 $690 $660 $440 $240 Should the project be accepted or rejected? multiple choice accepted rejected
Consider these mutually exclusive alternatives. MARR = 8% per year, so all the alternatives are acceptable. Solve, a. At the end of their useful lives, alternatives A and C will be replaced with identical replacements (the repeatability assumption) so that a 20-year service requirement (study period) is met. Which alternative should be chosen and why? b. Now suppose that at the end of their useful lives, alternatives A and C will be replaced with replacement alternatives having an 8% internal rate of return. Which alternative should be chosen and why?
Project P has a cost of $1,000 and cash flows of $300 per year for3 years plus another $1,000 in Year 4. The project’s cost of capital is15%. What are P’s regular and discounted paybacks? (3.10, 3.55) Ifthe company requires a payback of 3 years or less, would the projectbe accepted? Would this be a good accept/reject decision, consideringthe NPV and/or the IRR? (NPV = $256.72, IRR =24.78%)
For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order ofalternatives from least capital investment to greatest capital investment is Do Nothing → A → C → B. Complete the IRR analysis by selecting the preferredalternative. (a) Do Nothing (b) Alternative A (c) Alternative B (d) Alternative C.
A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400 after a year while project B pays $15,609 after three years. If management wants to select the investment with the higher return, which alternative should be chosen? Calculate the return for each investment and indicate which option provides the higher return and explain why.
Samuelson Electronics has a required payback period of three years for all of its projects. Currently,the firm is analyzing two independent projects. Project A has an expected payback period of 2.8 yearsand a net present value of $6,800. Project B has an expected payback period of 3.1 years with a netpresent value of $28,400. Which projects should be accepted based on the payback decision rule?Select one:a. Project A only.b. Project B only.c. Both A and B.d. Either, but not both projecte. Neither A nor B
Samuelson Electronics has a required payback period of three years for all of its projects. Currently,the firm is analyzing two independent projects. Project A has an expected payback period of 2.8 yearsand a net present value of $6,800. Project B has an expected payback period of 3.1 years with a netpresent value of $28,400. Which projects should be accepted based on the payback decision rule?

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