Q: 1. What is sensitivity analysis?
A: A sensitivity analysis is a technique or study that investigate how multiple values of an…
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Q: average rate of return for a project
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A: In best case scenario Variable cost is 20% lower = $7 -20% = $5.6
Q: Your employer is trying to select from a list of possible capital projects. The projects, along with…
A:
Q: A project requires an investment of $2,500 and has a net present value of $430. If the internal rate…
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A: INTERNAL RATE OF RETURN IS THE RATE AT WHICH PRESENT VALUE OF ANNUAL CASH FLOW OF INVESTMENT EQUALS…
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A: Average rate of return can be calculated by net average income divided by average investment.
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A: While comparing various projects, one should select the project which have maximum profit.
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A: Expected Profit or loss from the project can be calculated by subtracting the costs of the project…
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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?Given the net present value (NPV) of Project A is -$500,000, Project B is $200,000 and Project C is $250,000. Which of the project(s) can be accepted?What are the internal rates of return (IRR) on the three projects? Does the IRR rule in this case give the same decision as NPV? How do you know? If the opportunity cost of capital is 11%, what is the profitability index for each project? Please analyze if, in general, decisions based on the profitability index are consistent with decisions based on NPV. What is the most generally accepted measure to choose between the projects? Please justify your answer. Project A -5000 +1000 +1000 +3000 0 B -1000 0 +1000 +2000 +3000 C -5000 +1000 +1000 +3000 +5000 I will need full analysis (qualitative examples and references citations and examples of relative current investments of big companies.
- Management is considering two alternatives. Alternative A has projected revenue per year of $100,000 and costs of $70,000 while Alternative B has revenue of $100,000 and costs of $60,000. Both projects require an initial investment of $250,000 of which $75,000 has already been set aside and will be used as a down payment on the project that is chosen. There are also other qualitative factors that management must consider before making a final choice.Required: Which of the following statements is correct about relevant costs and relevant revenues. a. The sunk cost of $75,000 is relevant b. The projected revenues are relevant to the decision c. The only relevant item are the costs as they differ between alternative d. The initial investment of $250,000, the projected revenues, and the projected costs are all relevantLepton industries has theee potential projects, all with the initial cost of 2,300,000. Which project should lepton accept? Q,R,S?Suppose the capital budget was $100,000. What is the NPV of the best project(s)?
- Compare the following projects using the NPV method and the EAA method if the cost of capital is 17%. Year Project A Project B 0 ($400,000) ($400,000) 1 $175,000 $160,000 2 $225,000 $160,000 3 $300,000 $160,000 4 $200,000 $160,000 5 $160,000 6 $155,000 7 $155,000 8 $155,000 Use the information given in problem 8 to replicate Project A and compute the NPV of the new project that lasts for 8 years.Suppose that you could invest in the following projects but have only $24,480 to invest. Which projects would you choose? Project Cost NPV w $ 7,970 $ 3,000 x 10,990 7,530 y 8,500 4,280 z 6,750 3,890 You should invest in project(s)?You are anticipating the need to use contractor labor on a project. Your analysis has come up with the following: 30% probability of an additional resource added to the project, with a cost to the project of $40,000 PLUS a 10% probability that the project will complete earlier than planned, saving the project $10,000. What is the contingency reserve you would use? -$10,000 $13,000 -$11,000 $11,000
- Using payback to make capital investment decisions Consider the following three projects. All three have an initial investment of $800,000 Requirements Determine the payback period for each project. Rank the projects from most desirable to least desirable based on payback. Are there other factors that should be considered in addition to the payback period?Calculate the payback period for each of the following mutually exclusive projects, then comment on the advisability of selection based on the payback period criterion and compare the selecting suggestion with NPV method : Project A has a cost of $15,000, returns $4,000 after-tax the first year with this amount increasing by $1,000 annually over a 5-year life; Project B costs $15,000 and returns $13,000 after-tax the first year, followed by 4 years of $2,000 per year. The firm uses a 10% discount rate.Project A has an IRR of 25% and an NPV of $2 million. Project B has an IRR of 20% and an NPV of $3 million. Select all the following statements that are true. Group of answer choices If the projects are mutually exclusive, select project A only If the projects are mutually exclusive, select project B only If the projects are mutually exclusive, select both projects If the projects are independent, select project A only If the projects are independent, select project B only If the projects are independent, select both projects