There are 4 Projects (mutually exclusive real asset projects) to choose from. The total budget is Rs.1, 000 Project Io=Investment (Rs) IRR NPV(Rs) A: 200 40% 300 B: 100 40% 300 C: 300 35% 200 D: 800 30% 600 Which 3 projects you will choose from the above 4 real asset projects? We cannot pick all 4 Projects because the Budget Constraint is 1000 and the total investment in all 4 Projects is 1400 (=200+100+300+800).

There are 4 Projects (mutually exclusive real asset projects) to choose from. The total budget is Rs.1, 000 Project Io=Investment (Rs) IRR NPV(Rs) A: 200 40% 300 B: 100 40% 300 C: 300 35% 200 D: 800 30% 600 Which 3 projects you will choose from the above 4 real asset projects? We cannot pick all 4 Projects because the Budget Constraint is 1000 and the total investment in all 4 Projects is 1400 (=200+100+300+800).

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 7PROB

See similar textbooks

Similar questions

Question No 08: There are 4 Projects (mutually exclusive real asset projects) to choose from. The total budget is Rs.1, 000 Project Io=Investment (Rs) IRR NPV(Rs) A: 200 40% 300 B: 100 40% 300 C: 300 35% 200 D: 800 30% 600 Which 3 projects you will choose from the above 4 real asset projects? We cannot pick all 4 Projects because the Budget Constraint is 1000 and the total investment in all 4 Projects is 1400 (=200+100+300+800).
Suppose a company has the following three project and limits it capital budget to $50,000. Project Present Value of Cash Initial Investment A. $40,000. $25,000B. 37,500. 25,000C. 70,000. 50,0001. Calculate the projects' NPVs.2. Calculate the projects' PIs.3. Which project (s) should the company choose? Why?
You 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
XYZ, Inc. is evaluating several capital budgeting projects which are summarized in the table below. The cost of capital for XYZ is 8%. Project A B C D NPV $1,000 $1,500 $1,200 ($400) IRR 25% 12% 15% 5% Payback Period (years) 4.0 3.0 2.0 1.5 If these projects are mutually exclusive, then XYZ should accept project(s) Question 5 options: A B C D
Initial cost: $467,000 Cash flow year one: $134,000 Cash flow year two: $230,000 Cash flow year three: $187,000 Cash flow year four: $134,000 a. Using a discount rate of 10% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 14%? c. Should the company accept or reject it using a discount rate of 20%?
Initial cost: $467,000 Cash flow year one: $134,000 Cash flow year two: $230,000 Cash flow year three: $187,000 Cash flow year four: $134,000 a. Using a discount rate of 10% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 14%?
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 7
Assume that the manager faces a capital budget constraint with respect to total dollars available today to invest in new projects, $46 million. Assume same WACC for each project. All else equal, which project or set of otherwise independent projects should the manager choose? Project NPV $millions) IRR Required Investment today A $ 10 14.0% $ 22 Hs23Page 2 of 2Please underline final answers. Section B Section B Hs23Page 2 of 2Please underline final answers. B $ 9 12.9% $ 23 C $ 11 14.1% $ 23 Use the following information to answer the next threequestionsonly:[see next page for a blank area to do calculations.] The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $13,000 for the purchase and installation of equipment. The equipment will be depreciated…
8-9 Given the following information for projects X and Y, which one should be chosen and why? Project X Project Y Net present value $2,00,000 $3,000,000 Project life 5 years 8 years Required return 10% 10% Select one: a. Choose Project X, as it has a lower equivalent annual cost than Project Y. b. Choose Project Y, as it has a lower equivalent annual cost than Project X. c. Choose Project Y, as it has a higher equivalent annual benefit than Project X. d. Choose Project X, as it has a higher equivalent annual benefit than Project Y. e. Choose Project Y, as it has a higher net present value than Project X.
XY Company is considering 5 investment projects as follows: Project Investment ($) Profitability index (PI) A 10,000 1.2 B 6,000 1.1 C 18,000 1.6 D 14,000 0.9 E 12,000 1.3 The company has $30,000 available for investment. Projects C and E are mutually exclusive. All projects can be undertaken only once and are not divisible. Required: (iii)Calculate the maximum NPV earned from the projects to be picked.