Problem. Assume the following cash flow for 2 propects. Assuming that the cash Sows are occurring at the end of the year. Find the payback period for both these propects Year Project 1 Project 2 1000 600 1000 100 400 400 200 200 100 600 600 700 01234 in
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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
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- Working with your assigned group, please determine your answer to the questions below. We will discuss your group's responses during the live session this week. Consider the following two mutually exclusive projects: Year Cash Flow ($) - A Cash Flow ($) - B 0 -4,55,000 -65,000 1 58,000 31,000 2 85,000 28,000 3 85,000 25,500 4 5,72,000 19,000 Whichever project you choose, if any, you require a return of 11% on your investment. If you apply the payback criterion, which investment will you choose? If you apply the discounted payback criterion, which investment will you choose? If you apply the NPV criterion, which investment will you choose? If you apply the IRR criterion, which investment will you choose? If you apply the profitability index criterion, which investment will you choose? Based on your answers, which project will you finally choose?Task 2A business has two projects to invest in, as follows:Create a new spread sheet, calculate NPV for the following projects at discount rates of 3% and 7%, respectively, by creating a dynamic process. Project 1 Project 2Year Cash inflows Cash outflows Cash inflows Cash outflows0 0.00 70,000.00 0.00 70,000.001 24,000.00 13,000.00 25,000.00 15,000.002 22,000.00 1,000.00 25,000.00 03 25,000.00 0 20,000.00 04 25,000.00 0 43,000.00 21,000.005 17,500.00 7,500.00 20,000.00 5,000.00 P1: NPV P2: NPVThen, a) by using a built-in/Excel function, calculate the NPV for each project with discount rates of 3% and 7%, respectively;b) By comparing the NPVs at the rate of…**Please solve using Excel and show formulas.** Consider the following projects: Project Cash Flows A -4 5 2.3 0 0 1,000 B -5,600 2,800 2,800 5,800 2,800 2,800 C -7,000 2,800 2,500 0 2,800 2,800 Question: What is the payback period for Project C? Multiple Choice 3.4 3.9 3.2 3.6 3.8
- For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. A cash flow sequence starts in year 1 at $5,000 and increases by $200 each year through year 10. Determine the present worth of the sequence. Use an interest rate of 10%.Financial Manager of Timmy Company is considering two projects (project A and project H), which have cash flows as follows: Year Cash Flow of Project A (in $) Cash Flow of Project H (in $) 0 -100 -100 1 10 70 2 60 50 3 80 20 Timmy Company’s cost of capital is 10 percent. Calculate payback, NPV, IRR, and MIRR for both projects. (Please have a step by step format to your answer with explainations. Thanks (=)Please give exact answer and excel steps Jeans LLC has a project with the following cash flows . Its required rate of return is 5 % , Year 012345 Cash Flow Project A -52,000.00 25,000.00 17,000.00 14,000.00 12,000.00 -3,000.00 What is the internal rate of retum ( IRR ) for this project ? options: a. 11.73859230479%b. 11.73962884992%c. 11.738592037872%d. 11.738591574995%e. 11.738592402818%f. 11.738672984783% 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.
- An IT company receives two new project proposals. Project A will cost $250,000 to develop and is expected to have an annual net cash flow of $50,000. Project B will cost $350,000 to develop and is expected to have an annual net cash flow of $60,000. Analyzing the two projects from a cashflow perspective using the payback period, which project is better? Why? Write the answers in the “Payback" tab of the attached EXCEL template. You may use the Payback Period template if you wish to. Note: Enter the discounted costs and benefits for your project below. Add and delete rows as needed. Year Costs Benefits Cumulative Costs Cumulative Benefits 1 2 3 4An IT company receives two new project proposals. Project A will cost $250,000 to develop and is expected to have an annual net cash flow of $50,000. Project B will cost $350,000 to develop and is expected to have an annual net cash flow of $60,000. Analyzing the two projects from a cashflow perspective using the payback period, which project is better? Why? Write the answers in the “Payback" tab of the attached EXCEL template. You may use the Payback Period template if you wish to. Note: Enter your criteria, weights, and scores in the template below Insert or clear rows and columns as needed. Double check formulas and results. Criteria Project 1 Project 2 Project 3 Project 4 Project 5 Sponsor Support Strategic Alliance Urgency Fills a market gap Sales Competition Weighted Project Scores 0.00 0 0 0 0 0This fourth, and final, project for the semester will involve the following items to turn in: 1) A statement of cash flows from information I will provide you. You can turn in the information in excel, best choice, word or hand written and scanned. All files need to be uploaded to this assignment.
- For each requirement, change the values of the given information as shown and keep all other original data the same. Then enter your updated final answers for each scenario. Scenario A: Future value to be received $ 10,000 Future date received 3 years Discount Rate 6% 10% 16% Scenario B: Annual Cash Receipt $ 5,000 Number of Years 6 years Discount Rate 6% 10% 16% Scenario C: Discount Rate 8% Investment Project Cash Flow Initial Investment $ (6,500) Year 1 $ 700 Year 2 $ 800 Year 3 $ 1,400 Year 4 $ 3,600 Year 5 $ 6,800 Required: a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula in Excel, what is the Present Value of that money at three different rates? (Round your answers to 2 decimal places.)You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapesof the Weather Report)($28,000 Investment) Project Y (Slow-MotionReplays of Commercials)($48,000 Investment) Year Cash Flow Year Cash Flow 1 $ 14,000 1 $ 24,000 2 12,000 2 17,000 3 13,000 3 18,000 4 12,600 4 20,000 a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.) c. Which project would you select based on the profitability index? multiple choice Project X Project YJune.com is considering two projects given below: if the two projects have the same payback period, what would be project 2’s internal rate of return (IRR)? (Hint: you need to find project 1’s payback and find project 2 cashflow at year 0 using project 1’s payback period). Year Project 1 Project 2 Cash Flow Cash Flow cumulative cash flow 0 -$100 ? 1 30 40 -$70 2 50 80 -$20 3 40 60 $20 4 50 60 $70