Question
In: Finance
You are given the following information about Project Y and Project Z. Year Proj Y Proj...
You are given the following information about Project Y and Project Z.
Year Proj Y Proj Z
0 ($225,000) ($225,000)
1 210,000 95,000
2 98,000 88,000
3 — 73,000
4 — 87,500
The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have an 9% cost of capital.
a. What is each project’s initial NPV without replication? Which project will you choose?
b. What is the IRR of each project?
c. What is each project’s equivalent annual annuity? Which project will you choose?
d. Now apply the replacement chain approach to determine the shorter project’s extended NPV. Which project should be chosen?
e. Now assume that the cost to replicate Project Y in 2 years will increase to $290,000 because of inflationary pressures. How should the analysis be handled now, and which project should be chosen?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
You are given the following information about Project Y and Project Z. Year Proj Y Proj...
You are given the following information about Project Y and Project
Z.
Year
Proj
Y
Proj
Z
0
($225,000)
($225,000)
1
210,000
95,000
2
98,000
88,000
3
—
73,000
4
—
87,500
The projects provide a necessary service, so whichever one is
selected is expected to be repeated into the foreseeable future.
Both projects have an 9% cost of capital.
a. What is each
project’s initial NPV without replication? Which project will you
choose?
b. What is the IRR of...
You are given the following information about Project Y and Project Z. Year Proj Y Proj...
You are given the following information about Project Y and
Project Z.
Year
Proj Y
Proj Z
0
($225,000)
($225,000)
1
210,000
95,000
2
98,000
88,000
3
—
73,000
4
—
87,500
The projects provide a necessary service, so whichever one is
selected is expected to be repeated into the foreseeable future.
Both projects have an 9% cost of capital.
What is each project’s initial NPV without replication? Which
project will you choose?
What is the IRR of...
ou are given the following information about Project Y and Project Z. Year Proj Y Proj...
ou are given the following information about Project Y and
Project Z.
Year
Proj Y
Proj Z
0
($225,000)
($225,000)
1
210,000
95,000
2
98,000
88,000
3
—
73,000
4
—
87,500
The projects provide a necessary service, so whichever one is
selected is expected to be repeated into the foreseeable future.
Both projects have an 9% cost of capital.
What is each project’s initial NPV without replication? Which
project will you choose?
What is the IRR of each project?...
You are given the following information about Project Y and Project Z. **Show Formulas Used in...
You are given the following information about Project Y and
Project Z. **Show Formulas Used in Excel**
Year
Project Y
Project Z
0
($225,000)
($225,000)
1
210,000
95,000
2
98,000
88,000
3
---
73,000
4
---
87,500
The projects provide a necessary service, so whichever one is
selected is expected to be repeated into the foreseeable future.
Both projects have an 9% cost of capital.
a. What is each project’s initial NPV without replication? Which
project will you choose?
b....
Use the data below for problems 6 to 10. Year Proj Y Proj Z 0 ($210,000)...
Use the data below for problems 6 to 10.
Year
Proj Y
Proj Z
0
($210,000)
($210,000)
1
200,000
95,000
2
95,000
78,000
3
—
73,000
4
—
87,500
The projects provide a necessary service, so whichever one is
selected is expected to be repeated into the foreseeable future.
Both projects have an 11% cost of capital.
6. What is each project’s initial NPV without
replication?
7. What is each project’s equivalent annual
annuity?
8. Now apply the...
You are given the following information about y and x: y x Dependent Variable Independent Variable...
You are given the following information about y and
x:
y
x
Dependent Variable
Independent Variable
5
15
7
12
9
10
11
7
Calculate the value of SSR, using the
formula.
Q3: You are given the following information about ABC Company for year 2017 and you are...
Q3: You are given the following
information about ABC Company for year 2017 and you are required to
compute net operating income using both absorption and variable
costing with your comment on results.
Number of units produced
30,000
Number of units sold
25,000
Units in begging inventory
0
Units sales price
SR 40
Variable costs per units
Direct material
SR7
Direct labor
SR5
Manufacturing overhead
SR3
Selling and administrative expenses
SR 5
Fixed expenses per year:
Manufacturing overhead
SR 150,000...
You have been given the following information about a motel for the coming year: &
You have been given the following information about a motel for
the coming
year:
(A)
Occupancy Forecast
75%
(B)
Rooms department variable cost per occupied room is estimated to
be
$7.75
(C)
Owners'
investment
$800,000
(D)
Desired after tax yield on owners' investment
15%
(E)
Current income tax rate
30%
(F)
The motels fixed costs for the coming year were anticipated to be
825,000
(G)
The motel has this many rooms available to rent
100...
Suppose that you are given the following information about the stock price/dividends for a company: Year...
Suppose that you are given the following information about the
stock price/dividends for a company:
Year
Beginning of Year Price
Dividend Paid at Year-End
2016
$80
$3
2017
$85
$4
2018
$78
$2
2019
$82
$2
If the company's stock price is $85 per share at the end of
2019, what is the arithmetic average return for an investment in
XYZ over the period? What is the geometric average return for an
investment in XYZ over the period? (Do not...
1. You are given the following information about a country’s international transactions during a year: Item...
1. You are
given the following information about a country’s international
transactions during a year:
Item
Value ($ millions)
Exports
526
Imports
402
Net Income from Foreigners
3
Net Unilateral Transfers
-8
Net Increase in the Country's Holding of Foreign Assets
(excluding official reserves)
202
Net Increase in Foreign Holdings of the Country's Assets
(excluding official reserves)
102
Net Statistical Discrepancy
4
a. Please
calculate the country’s net exports.
b. Please
calculate the country’s current account balance.
c. Please
calculate...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Consider the following information of Petronas Bond Description Petronas Bond Face value RM 1000 Maturity...
- Each player throws both dice once per turn. The player only scores when the player throws...
- If water is seeping, the effective stress at any point in a soil mass will be...
- QUESTION 2 [35 MARKS] Consider the following information of Petronas Bond Description Petronas Bond Face value...
- Do relativism and subjectivism generate contradictions? Why might someone accuse the theories of doing so? How...
- Analyze the industry environment of Walmart in 2018
- 1. In the following ordinary annuity, the interest is compounded with each payment, and the payment...
ADVERTISEMENT