Question
In: Finance
g. Determine the PI for each of these projects. Should either project be accepted? PROJECT A...
g. Determine the PI for each of these projects. Should either project be accepted?
|
PROJECT A |
PROJECT B |
|||
|
Initial outlay |
-110,000 |
-110,000 |
||
|
Inflow year 1 |
10,000 |
40,000 |
||
|
Inflow year 2 |
30,000 |
40,000 |
||
|
Inflow year 3 |
40,000 |
40,000 |
||
|
Inflow year 4 |
60,000 |
40,000 |
||
|
Inflow year 5 |
80,000 |
40,000 |
||
g. What is the PI for project A?
nothing
(Round to three decimal places.)
Caledonia should
accept
project A because its PI is
greater than or equal to
1.00. (Select from the drop-down menus.)
What is the PI for project B?
nothing
(Round to three decimal places.)
Caledonia should
accept
project B because its PI is
greater than or equal to
1.00
Solutions
jeff jeffy answered 7 months agoRelated Solutions
Calculate the NPV for each project and determine which project should be accepted. Project A Project...
Calculate the NPV for each project and determine which project
should be accepted.
Project A
Project B
Project C
Project D
Inital Outlay
(105,000.000)
(99,000.00)
(110,000.00)
(85,000.00)
Inflow year 1
53,000.00
51,000.00
25,000.00
45,000.00
Inflow year 2
50,000.00
47,000.00
55,000.00
50,000.00
Inflow year 3
48,000.00
41,000.00
15,000.00
30,000.00
Inflow year 4
30,000.00
52,000.00
21,000.00
62,000.00
Inflow year 5
35,000.00
40,000.00
35,000.00
68,000.00
Rate
7%
10%
13%
18%
Your company is considering three independent projects. Given
the following cash flow information,...
Calculate the NPV for each project and determine which project should be accepted. Project A Project...
Calculate the NPV for each project and determine which project
should be accepted. Project A Project B Project C Project D Initial
Outlay (105,000.00) (99,000.00) (110,000.00) (85,000.00) Inflow
year 1 53,000.00 51,000.00 25,000.00 45,000.00 Inflow year 2
50,000.00 47,000.00 55,000.00 50,000.00 Inflow year 3 48,000.00
41,000.00 15,000.00 30,000.00 Inflow year 4 30,000.00 52,000.00
21,000.00 62,000.00 Inflow year 5 35,000.00 40,000.00 35,000.00
68,000.00 Rate 7% 10% 13% 18% NPV = $75,228.32 $77,364.07
-$2,531.00 $69,006.08 Answer: Project B How to show work...
Nokia has two Projects. Project A and Project B. Which project should be accepted under each...
Nokia has two Projects. Project A and Project B. Which project
should be accepted under each measurement.
Project A
Project B
NPV ($)
2578
3842
IRR ($)
12
14
MIRR (%)
10
11
PI
1.2
1.5
Payback Period (years)
3
3.8
Discounted Payback Pd (Years)
4.2
4.8
Nokia's cost of capital is 8%. Its critical payback period is 2
years and the critical discount payback period is 3 years
NPV - (Project A be accepted, Project B be accepted, or...
(NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B....
(NPV,
PI, and IRR
calculations)
You are considering two independent projects, project A and
project B. The initial cash outlay associated with project A is
$50,000
and the initial cash outlay associated with project B is
$70,000
The required rate of return on both projects is
9
percent. The expected annual free cash inflows from each project
are in the popup window:
Calculate the
NPV,
PI,
and IRR for each project and indicate if the project should be
accepted.
...
(NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B....
(NPV,
PI, and IRR
calculations)
You are considering two independent projects, project A and
project B. The initial cash outlay associated with project A is
$50,000
and the initial cash outlay associated with project B is
$70,000
The required rate of return on both projects is
12
percent. The expected annual free cash inflows from each project
are in the popup window:
.Calculate the
NPV,
PI,
and IRR for each project and indicate if the project should be
accepted.
a....
Use the NPV method to determine whether Salon Products should invest in the following projects: Project...
Use the NPV method to determine whether Salon Products should
invest in the following projects: Project A costs $290,000 and
offers seven annual net cash inflows of $64,000. Salon Products
requires an annual return of 12% on projects like A. Project B
costs $390,000 and offers ten annual net cash inflows of $74,000.
Salon Products demands an annual return of 14% on investments of
this nature. What is the NPV of each project? What is the maximum
acceptable price to...
87. Should the following project be accepted if the cost of capital is 12%? Initial Investment...
87. Should the following project be accepted if the cost of
capital is 12%?
Initial Investment is $50,000.
Years
Cash Flows
1
$25,000
2
$35,000
3
$55,000
a.
Yes, because the internal rate of return is 10.5%, which is less
than 12%.
b.
Yes, because the internal rate of return is 35%, which is more
than 12%.
c.
No, because the internal rate of return is 8.7%, which is less
than 12%.
d.
Yes, because the internal rate of...
For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each...
For each project, calculate the NPV, IRR, profitability index
(PI) and the payback period. For each capital budgeting decision
tool, indicate if the project should be accepted or rejected,
assuming that each project is independent of the others. Important
Note: The venture capital folks have a firm maximum payback
period of four years. Risk free rate = 1.10%, MRP = 9.5%,
Required return = 14.40% Yes excel is fine
Expected cash flows for the four potential projects that Avalon
is...
Compute the PI statistic for Project X and note whether the firm should accept or reject...
Compute the PI statistic for Project X and note whether the firm
should accept or reject the project with the cash flows shown as
follows if the appropriate cost of capital is 10%.
Time
0
1
2
3
4
5
Cash Flow
-250
75
0
100
75
50
a) 2.41, accept
b) 0.023, reject
c) 0.90, reject
d) 1.97, accept
Compute the PI statistic for Project X and note whether the firm should accept or reject...
Compute the PI statistic for Project X and note whether the firm
should accept or reject the project with the cash flows shown below
if the appropriate cost of capital is 8 percent.
Time: 0, 1, 2, 3, 4, 5
Cash Flow: -82, -82, 0, 117, 92, 67
Time:
0
1
2
3
4
5
Cash flow:
-82
-82
0
117
92
67
Multiple Choice
48.17 percent, reject
8.00 percent, accept
58.74 percent, accept
47.21 percent, reject
All information is...
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