Robust Ventures is planning to expand its production operation. It has identified threedifferent technologies for meeting the goal. The initial investment and annual revenueswith respect to each of the technologies are summarized in table below.InitialInvestmentAnnualRevenueLife(years)(Php)(Php)Technology X1,200,000400,00010Technology Y2,000,000600,00010Technology Z1,800,000500,00010Assuming 20% interest rate, compounded annually, find the future worth ofTechnology Z.O a. Php 24 millionO b. Php 42 millionc. Php 30 milliond. Php 20 million

The future worth concept is an important aspect of financial management. The concept states that the…

Answered: Robust Ventures is planning to expand…

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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Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Initial Annual Life Investment Revenue (years) (Php) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 Technology Z 1,800,000 500,000 10 Assuming 20% interest rate, compounded annually, find the future worth of Technology Z. 10
Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Annual Revenue Initial Life Investment (years) (Php) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 10 Technology Z 1,800,000 500,000 10 Assuming 20% interest rate, compounded annually, find the future worth of Technology Y. a. Php 25 million O b. Php l15 million O c. Php 35 million d. Php 20 million
Robust Ventures is planning to expand its production operation. It has identified three different technologies for meeting the goal. The initial investment and annual revenues with respect to each of the technologies are summarized in table below. Initial Investment Annual Revenue Life (years) (Php) (Php) Technology X 1,200,000 400,000 10 Technology Y 2,000,000 600,000 10 Technology Z 1,800,000 500,000 10 Assuming 20% interest rate, compounded annually, find the future worth of Technology Y.
b) Following data relate to five independent investment projects : Initial Outlay Projects P ORST 1,000,000 240,000 184,000 11,500 80,000 Annual Cash Inflows Life in Years 250,000 24,000 30,000 4,000 12,000 8 15 20 5 10 Page 2 of 3 Assume a 10% required rate of return and a 50% tax rate. Rank these five investment projects according to each of the following criteria: (i) Pay-back Period. (ii) Accounting Rate of Return. (iii) Net Present Value Index. (iv) Internal Rate of Return.
First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $686,053 $516,654 $295,458 Annual net cash flows: Year 1 411,000 288,000 177,000 Year 2 382,000 259,000 122,000 Year 3 349,000 230,000 89,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each project. Use the…
1. A manufacturing company wants to expand its product line. There are two investment projects which could help the company achieve its aim. The data for each investment project is shown below. Data for the investment projects A and B Project A Year Initial investment outlay Cash inflows Personnel expenses Material expenses Maintenance expenses 0. 1 3 125,000 75,000 22,500 15,000 2,500 3,750 80,000 22,500 20,000 2,500 3,750 95,000 22,500 22,500 5,000 3,750 95,000 22,500 22,500 8,750 5,000 86,250 22,500 22,500 10,000 5,625 12,500 Other cash outflows Liquidation value Project B Year Initial investment outlay Cash inflows Personnel expenses Material expenses Maintenance expenses 2. 3. 4 225,000 155,000 140,000 27,500 27,500 22,500 25,000 8,750 11,250 108,750 93,750 27,500 27,500 22,500 22,500 15,000 17,500 3,750 3,750 125,000 27,500 24,000 14,000 4,000 15,000 Other cash outflows 6,250 3,750 Liquidation value The Discount Rate is 8% a. Assess the relative profitability of the two options…
The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $35,000 $65,000 $21,000 $51,000 2 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 Total $105,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627…
The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $55,000 $171,000 $116,000 $274,000 2 55,000 171,000 88,000 231,000 3 55,000 171,000 44,000 162,000 4 55,000 171,000 19,000 111,000 5 55,000 171,000 8,000 77,000 Total $275,000 $855,000 $275,000 $855,000 Each project requires an investment of $500,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279…
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 14,420 17.510 23,690 3 14,420 16,480 21,630 14.420 12.360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years eTextbook and Media Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or…
6 Lewis Services is evaluating six investment opportunities (projects). The following table reflects each project’s net present value NPV and the respective initial investments required. All of these projects are independent.Project NPV InvestmentI 2,500 2,500II 4,000 20,000III 7,500 30,000IV 8,000 40,000V 2,000 10,000VI 2,500 5,000Lewis has an investment constraint of P50,000. Which combination of projects would represent the optimal investment that should be recommended to Lewis Services’ management? Group of answer choices II, IV and III IV only I, IV and VI I, II, III, V, and VI I, III and IV I, II, III, IV, V, and VI I, III, and VI I, III, V, and VI
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono enter the cash payback period in years rounded to 2 decimal places years Project Edge enter the cash payback period in years rounded to 2…
Simple Investment Allocation Case: This year, 2022 ABM Company selected your team to manage their allotted budget amounting to 10 million pesos for investment diversification portfolio. Your team was assigned to handle the said account. What would you choose? Other investment assets or Alternatives to fixed income and equities

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