Proposal X Proposal Y Required investment &nbs

Proposal X Proposal Y

Required investment $2,400,000 $3,000,000

Estimated life 10 years 10 years

Estimated residual value $200,000 $200,000

Estimated annual net cash flows $450,000 $580,000

Required rate of return 14% 14%

Which proposal is the better investment.

Expert Solution


Proposal X
Discount rate	0.14
Year	0	1	2	3	4	5	6	7	8	9	10
Cash flow stream	-2400000	450000	450000	450000	450000	450000	450000	450000	450000	450000	650000
Discounting factor	1	1.14	1.2996	1.481544	1.6889602	1.925415	2.194973	2.502269	2.852586	3.251949	3.707221
Discounted cash flows project	-2400000	394736.8	346260.4	303737.2	266436.12	233715.9	205013.9	179836.8	157751.6	138378.6	175333.5
NPV = Sum of discounted cash flows
NPV Proposal X =	1200.8
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor




Proposal Y
Discount rate	0.14
Year	0	1	2	3	4	5	6	7	8	9	10
Cash flow stream	-3000000	580000	580000	580000	580000	580000	580000	580000	580000	580000	780000
Discounting factor	1	1.14	1.2996	1.481544	1.6889602	1.925415	2.194973	2.502269	2.852586	3.251949	3.707221
Discounted cash flows project	-3000000	508771.9	446291.2	391483.5	343406.56	301233.8	264240.2	231789.6	203324.3	178354.6	210400.2
NPV = Sum of discounted cash flows
NPV Proposal Y =	79295.84
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor

Choose proposal Y as it has higher NPV

jeff jeffy answered 2 months ago

Given: X TUx MUx MUx/Px Y TUy &nbs

Given: X TUx MUx MUx/Px Y TUy MUy MUy/Py MUy/Py’ 0 0 0 0 0 0 0 0 0 1 250 1 350 2 450 2 550 3 600 3 700 4 700 4 800 5 775 5 875 6 800 6 900 Suppose income I = $160, Px = $20, & Py = $20. Find the combination of X and Y that maximizes utility. Calculate Consumers’ surplus of X, CSx = TUx – TEx, total utility minus total expenditures...

Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X...

Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $52,000 $52,000 $52,000 Cash flow from operations Year 1 50,000 26,000 52,000 Year 2 2,000 26,000 Year 3 27,000 27,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that...

a) y''(x)-3y'(x)=8e3x+4sinx b) y''(x)+y'(x)+y(x)=0 c) y(iv)(x)+2y''(x)+y(x)=0

Three materials X, Y, and Z are required to produce two products A and B. The...

Three materials X, Y, and Z are required to produce two products A and B. The profit function of each product is nonlinear. The total profit function for Product A is 80A - A2 and the total profit function for Product B is 72B - 0.8B2. Thus, the total profit for producing A and B together is 80A - A2 + 72B - 0.8B2. (These two profit functions are independent.) a. Use the Nonlinear Solver (GRG Nonlinear) to solve the...

C code required /* * isGreater - if x > y then return 1, else return...

C code required /* * isGreater - if x > y then return 1, else return 0 * Example: isGreater(4,5) = 0, isGreater(5,4) = 1 * Legal ops: ! ~ & ^ | + << >> * Max ops: 24 * Rating: 3 */

1. Assume investment X has a standard deviation of 20%, investment Y has a standard deviation...

1. Assume investment X has a standard deviation of 20%, investment Y has a standard deviation of 20%, and X and Y have a correlation of 0.5. If 50% is invested in X and 50% is invested in Y then which is following is true? a. The portfolio standard deviation will be greater than 20% b. The portfolio standard deviation will be less than 20% 2. Which of the following is true? a. Total risk decreases as the number of...

That is, PDEs of the general form A(x, y, u) ∂u(x, y) ∂x + B(x, y,...

That is, PDEs of the general form A(x, y, u) ∂u(x, y) ∂x + B(x, y, u) ∂u(x, y) ∂y = C(x, y, u), (1) for some A, B and C. To solve such PDEs we first find characteristics, curves in the solution space (x, y, u) parametrically given by (x(τ ), y(τ ), u(τ )), which satisfy dx dτ = A(x, y, u), dy dτ = b(x, y, u), du dτ = C(x, y, u). (2) We find solutions...

solve y' +(x+2/x)y =(e^x)/x^2 ; y(1)=0

If the joint probability distribution of X and Y f(x, y) = (x + y)/2

If the joint probability distribution of X and Y f(x, y) = (x + y)/2, x=0,1,2,3; y=0,1,2, Compute the following a. P(X≤2,Y =1) b. P(X>2,Y ≤1) c. P(X>Y) d. P(X+Y=4)

1. The joint prob dist of X and Y is given by: P(x,y)=K|x-y|, x=0,1,2, y =...

1. The joint prob dist of X and Y is given by: P(x,y)=K|x-y|, x=0,1,2, y = 1, 2, 3, 4 a) Determine the value of K. b) Determine the marginal distribution of X and hence compute E(X) and Var(X). c) Determine the marginal distribution of Y and hence compute E(Y) and Var(Y). d) Determine E(X|y=3) and Var(Y|y=3). e) Are X and Y independent? 2. The joint prob dist of X and Y is given by: P(x,y) = Kxy, x=1,2,3, 4...

Question