Question
In: Finance
X construction is considering two projects to develop. The estimated net cash flow from each project...
X construction is considering two projects to develop. The
estimated net cash flow from each
project is as follows:
| Project X | Project Y | |
| Year 1 | 110,000 | 75,000 |
| Year 2 | 65,000 | 150,000 |
| Year 3 | 100,000 | 60,000 |
| Year 4 | 115,000 | 55,000 |
| Year 5 | 35,000 | 60,000 |
Project requires an investment of $200,000. A rate of 15% has
been selected for the NPV
analysis.
Requires to
a) Calculate Payback period, ARR, Net Present Value and
Profitability Index
b) Which Project is to be recommended to develop based on NPV,
Profitability Index,
Payback period and ARR? Suggest
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Capital Investment Appraisal Techniques X construction is considering two projects to develop. The estimated net cash...
Capital Investment Appraisal Techniques X construction is
considering two projects to develop. The estimated net cash flow
from each project is as follows: Project X Project Y Year 1 110,000
75,000 Year 2 65,000 150,000 Year 3 100,000 60,000 Year 4 115,000
55,000 Year 5 35,000 60,000 Project requires an investment of
$200,000. A rate of 15% has been selected for the NPV analysis.
Requires to
a) Calculate Payback period, ARR, Net Present Value and
Profitability Index
b) Which Project...
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project...
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$142,000
$119,000
2
117,000
140,000
3
101,000
96,000
4
91,000
67,000
5
28,000
57,000
Total
$479,000
$479,000
Each project requires an investment of $259,000. A rate of 20%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893...
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project...
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$105,000
$88,000
2
86,000
103,000
3
74,000
71,000
4
67,000
49,000
5
21,000
42,000
Total
$353,000
$353,000
Each project requires an investment of $191,000. A rate of 6%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893...
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project...
Elite Apparel Inc. is
considering two investment projects. The estimated net cash flows
from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$129,000
$108,000
2
106,000
127,000
3
91,000
87,000
4
83,000
61,000
5
26,000
52,000
Total
$435,000
$435,000
Each project requires
an investment of $235,000. A rate of 10% has been selected for the
net present value analysis.
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893...
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project...
Elite Apparel Inc. is considering two investment projects. The
estimated net cash flows from each project are as follows:
Year
Plant Expansion
Retail Store Expansion
1
$102,000
$85,000
2
83,000
100,000
3
72,000
68,000
4
65,000
48,000
5
20,000
41,000
Total
$342,000
$342,000
Each project requires an investment of $185,000. A rate of 10%
has been selected for the net present value analysis.
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893...
QUESTION 4: Capital Investment Appraisal Techniques X construction is considering two projects to develop. The estimated...
QUESTION 4:
Capital Investment Appraisal Techniques
X construction is considering two projects to develop. The
estimated net cash flow from each
project is as follows:
Project X Project Y
Year 1 110,000 75,000
Year 2 65,000 150,000
Year 3 100,000 60,000
Year 4 115,000 55,000
Year 5 35,000 60,000
Project requires an investment of $200,000. A rate of 15% has been
selected for the NPV
analysis.
Requires to
a) Calculate Payback period, ARR, Net Present Value and
Profitability Index
b)...
The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash...
The management of Quest Media Inc. is considering two capital
investment projects. The estimated net cash flows from each project
are as follows:
Year
Radio Station
TV Station
1
$170,000
$310,000
2
170,000
310,000
3
170,000
310,000
4
170,000
310,000
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash...
The management of Quest Media Inc. is considering two capital
investment projects. The estimated net cash flows from each project
are as follows:
Year
Radio Station
TV Station
1
$220,000
$460,000
2
220,000
460,000
3
220,000
460,000
4
220,000
460,000
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash...
The management of Quest Media Inc. is considering two capital
investment projects. The estimated net cash flows from each project
are as follows:
Year
Radio Station
TV Station
1
$340,000
$610,000
2
340,000
610,000
3
340,000
610,000
4
340,000
610,000
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
your division is considering two projects with the following net cash flows (in millions) project A...
your division is considering two projects with the following net
cash flows (in millions)
project A -30 10 15 22
project B -25 15 14 11
what are the projects NPV's assuming the WACC is 5%?
what are the projects IRR's assuming the WACC is 5%?
if the WACC were 5% and projects A and B were mutually
exclusive, which project would you choose?
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