Suppose now that we have a multi-period project . The project costs $100,000 Perlodi Perlod2 Perlod3 CF1 pl CF2 pl CF3 pl 23797.53 0.4 33226.74 0.3 24246.54 0.1 47595.06 0.5 66453.48 0.6 48493.08 0.7 71392.59 0.1 99680.22 0.1 72739.62 0.2 1/ FInd the E(CF1), E(CF2) and E(CF3) 2/ Flnd the V(CF1), V(CF2) and V(CF3) 3/ IF the requlred rate of return Is 9% then 3-1 Find E(NPV) 3-2 Find V(NPV) if we consider Independence Between the Cash Flows 3-3 Find the o(NPV) if we consider total dependence Between the Cash Flows. 3-4 Find the probability that the NPV of the project is less than to zero the if we consider total dependence Between the Cash Flows
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- Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?Determine the best alternatives for a government project with the following data: PROJECT A B C ANNUAL BENEFIT P250,000.00 P320,000.00 P350,000.00 ANNUAL COSTS P100,000.00 P135,000.00 p180,000.00 B/C RATIO 2.5 2.37 1.94 What is the best Project and its incremental ratio? a. A = 1.2 b. A = 2 c. B = 2.0 d. B = 1.18Use the data below for problems 6 to 10. YearProj YProj Z 0($420,000)($420,000) 1400,000182,000 2185,000156,000 3—146,000 4—175,000 The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have an 11% cost of capital. 6. What is each project’s initial NPV without replication? 7. What is each project’s equivalent annual annuity? 8. Now apply the replacement chain approach to determine the shorter projects’ extended NPV. Which project should be chosen? 9. Now assume that the cost to replicate Project Y in 2 years will increase to $600,000 because of inflationary pressures. How should the analysis be handled now, and which project should be chosen?
- You are considering the following investment activity. The facts are the following: Required investment 300,000.00 Discount Rate 9% Life of project 7.00 Years Net income for the project Sales 140,000.00 Expenses Material 25,000.00 Labor 35,000.00 235000 Overhead 15,000.00 Total Expenses 75,000.00 Net Income 65,000.00 What is the NPV of this investment? 2,714,193.00 What is the IRR of this investment? 11646% Would you fund this project? yes Show your work below Year 0 -300,000.00 1 65,000.00 2 65,000.00 3 65,000.00 4 65,000.00 5 65,000.00 6 65,000.00 7 65,000.00You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000You must decide firm which of the proposed projects should be accepted for the upcoming year since only $6 million is available. Which projects should be accepted? Project Cost (millions) NPV (millions) A 3.25 0.80 B 1.75 0.52 C 4.5 0.69 D 3.75 0.95 E 1.25 0.25 F 0.50 0.25
- Tiffany Co. is analyzing two projects for the future. Assume that only one project can be selected. Project Y Project X Cost of machine P680,000 P600,000 Net cash flow: Year 1 240,000 40,000 Year 2 240,000 260,000 Year 3 240,000 260,000 Year 4 0 200,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? Group of answer choices Project Y. Project Y because it has a lower initial investment. Both X and Y are acceptable projects. Project X. Neither X nor Y is an acceptable project.4 You are considering the following investment activity. The facts are the following: Required investment 300,000.00 Discount Rate 9% Life of project 7.00 Years Net income for the project Sales 140,000.00 Expenses Material 25,000.00 Labor 35,000.00 Overhead 15,000.00 Total Expenses 75,000.00 Net Income 65,000.00 What is the NPV of this investment? What is the IRR of this investment? Would you fund this project? Show your work below Year 0 1 2 3 4 5 6 7Use the data below for problems 6 to 10. Proj Y 0). (420000) 1). 400000 2). 185000 Project Z 0). (420000) 1). 182000 2). 156000 3). 146000 4). 175000 The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have an 11% cost of capital. 6. What is each project’s initial NPV without replication? 7. What is each project’s equivalent annual annuity? 8. Now apply the replacement chain approach to determine the shorter projects’ extended NPV. Which project should be chosen? 9. Now assume that the cost to replicate Project Y in 2 years will increase to $600,000 because of inflationary pressures. How should the analysis be handled now, and which project should be chosen?
- Apple is considering two mutually exclusive projects. The required rate of return on this project is 10%. The two projects provide the following information: Project A Project B Initial Outlay (RM500,000) (RM500,000) Inflow year 1 RM120,000 RM160,000 Inflow year 2 RM110,000 RM160,000 Inflow year 3 RM130,000 RM160,000 Inflow year 4 RM180,000 RM160,000 d. Calculate the internal rate of return (IRR) for project B, Given the IRR for project A is 6% e. Based on your answer in (a) to (d), which project should be accepted? Explain your decision.dont mind the questions in the picture, just answer this two What was the estimated gross profit on the project by the end of 2020? P140,000 P160,000 P180,000 P300,000 What was the estimated cost to complete the project at the end of 2020? P1,700,000 P660,000 P1,020,000 P680,000Delta Gamma Inc. is considering two investment projects, each of which requires an up-front expenditure (investment) of $50 million. The opportunity cost of capital is 10% for each project, and the investments will produce the following cash flows (in millions of dollars).Year Project Delta Project Gamma1 $5m $30m2 $10m $25m3 $20m $10m4 $50m $5m(a) What is the payback period for each project?(a) What is the NPV for each project?(b) What is the IRR for each project (Hint: You may use =IRR function in excel)?(c) If the projects are independent and the cost of capital is 10%, which project orprojects should the firm undertake?(d) If the projects are now mutually exclusive and the cost of capital is 5%, whichproject or projects should the firm undertake? Why?(e) If the projects are mutually exclusive and the cost of capital is 15%, which projector projects should the firm undertake? Why?