The details for the two project proposals are shown below: IRR NPW (15%) EUAW(15%) PROJECT 1 20.01% $33.483 $9.988 PROJECT II 18.26% $29.076 $8.674 If MARR is 25% per year, which alternative is better? Select one: a. PROJECT I b. None of them ✔
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- Part 1Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutuallyexclusive projects. The required rate of return is 15% and the target payback is 4 years.Explain which project is preferable under each of the four capital budgeting methodsmentioned above: Cash flows for two mutually exclusive projects Year Investment A Investment B 0 -$5,000,000 -5,000,000 1 $1,500,000 $1,250,000 2 $1,500,000 $1,250,000 3 $1,500,000 $1,250,000 4 $1,500,000 $1,250,000 5 $1,500,000 $1,250,000 6 $1,500,000 $1,250,000 7 $2,000,000 $1,250,000 8 0 $1,600,000 Part 2 Please study the following capital budgeting project and then provide explanations for thequestions outlined below:You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ),manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.1 million in…Two machines are being considered for purchase. If the MARR (for this problem, also the minimum required interest rate) is 10%, which machine should be bought?Kwame Nkrumah University of Cape Coast, Legon spent GHS1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%.a. If electricity can be purchased for costs of GHS0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even?b. If efficient systems operate for 2,400 hours per year, would the project break even?c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
- Three different alternatives shown in the table below are being considered by Kal Tech Engineering systems. Assume that alternatives X and Z are replaced at the end of their lives. Data Alternative X Alternative Y Alternative Z Initial Cost $6,000 $1,000 $1,500 Uniform Annual Benefits $810 $125 $ 230 Useful Life in Years 20 ∞ (infinity) 10 MARR (Interest Rate) 12% Refer to the data above. The most desirable alternative is ________. Group of answer choices Do nothing Alt. Z Alt. Y Alt. X Quiz saved at 11:56pm Submit QuizEstimates for a proposed small public facility are as follows: Plan A has a first costof $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expensesof $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, andannual maintenance expenses of $6,000 for the first 15 years and $1,000 per year foryears 16 through 50. Let MARR be 10% per year.(a) Find the Net Present Value, and. Net Annual Value for the two alternatives.(b) Which ones are feasible, and which one would you choose if you had to pick oneof the two?Net present value (NPV) of the project =Single payoff x PVIAF (10.20%, 9 years) - initial outlay = $6,947 x 0.42340 - $2,182 = $759.39 What's the equation for the bolded item?
- Project A requires an immediate investment of $8000 and another $6000 in three years. Net returns are $4000 after two years, $12,000 after four years, and $8000 after six years. Project B requires an immediate investment of $4000, another $6000 after two years, and $4000 after four years. Net returns are $3400 per year for seven years. Determine the net present value at 10%. Which project is preferable according to the net present value criterion?Hospital is evaluating the purchase of new office equipment from three vendors. Assume MARR=15% and 4 year useful life on all equipment. Select best vendor. What is the best vendor?DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
- Ten years ago, Johnson Recovery purchased a wrecker for $330, 000 to move disabled 18-wheelers. He received a salvage value of $25, 000 after 10 years of use. During this 10-year period, his average annual revenue totaled $60, 000. a) Did he recover his investment at 12% per year return? In other words, does the Annual Equivalent Value of the benefits exceed the Capital Recovery cost at an interest rate of 12%? b) Suppose Johnson moves, on average, 250 disabled 18-wheelers each year. What is his average equivalent benefit/cost per vehicle moved? c) Now, incorporate annual operating and maintenance costs into your analysis. If the annual O&M cost was $5, 000 the first year and increased by a constant 10% per year, what is the annual equivalent worth at 12% per year?13) The independent projects must have positive and negative cash flows to obtain a PW value that can exceed zero, which means that they must be revenue projects. Select one: True False 14) capitalized cost is considered as the present worth of projects that has a short life or when the planning horizon is very short. Select one: True FalseYou are considering the following project: It pays you $2,500 at the end of the first year, costs $8,500 by the end of the second year and brings $6,800 a year after. What is the project's internal rate of return(s), exact external rate of return and the approximate external rate of return it current MARR is 14%?