Question
In: Accounting
there are presently (2) projects available to shrewsberry limited,however the company only has cash available of...
there are presently (2) projects available to
shrewsberry limited,however the company only has cash available of
one of them.
Project
R.
Project S
investment.
900000.
600000
Depreciation straight line straight line
cost of capital
14%.
14%
lifespan. 5
years.
5 years
residual
84000.
nil
net
profit.
year
1.
56000.
7000
year
2
80000
7000
year
3
102000.
7000
year
4.
130000
7000
year
5.
152000
7000
required:
1.1 calculate the accounting rate of return for project R.
1.2 Calculate the payback period for both projects.
1.3 calculate the net present value for both projects
1.4 which project should the company choose and why?
Solutions
Expert Solution
Answer is given below
Accounting rate of return has been given based initial investment as well as average investment
ekkarill92 answered 1 year agoRelated Solutions
Exercise 11-9 Preference Ranking of Investment Projects [LO11-3] Oxford Company has limited funds available for investment...
Exercise 11-9 Preference Ranking of Investment Projects
[LO11-3]
Oxford Company has limited funds available for investment and
must ration the funds among four competing projects. Selected
information on the four projects follows:
Project
Investment
Required
Net
Present
Value
Life of
the
Project
(years)
Internal
Rate
of Return
(percent)
A
$900,000
$319,400
6
21%
B
$770,000
$464,050
11
22%
C
$750,000
$338,750
6
24%
D
$950,000
$207,050...
A company is evaluating two independent projects for capital investment purposes. If the company has only...
A company is evaluating two independent projects for capital
investment purposes. If the company has only $85 million to invest,
and its required return is 10 percent by how much the company’s
value will increase?
All values are in millions.
Project 1
Project 2
0
-50
-50
1
30
0
2
25
0
3
20
0
4
20
150
A) 52.45 million
B) 26.62 million
C) 79.07 million
D) 60.77 million
E) 45.33 million
Use of Limited Resources Northern Production Company has 200 labor-hours available. There is no limit on...
Use of Limited Resources Northern Production Company has 200
labor-hours available. There is no limit on machine-hours. Northern
can sell all of Y it wants, but it can only sell 45 units and 20
units of X and Z, respectively. Product X Product Y Product Z
Contribution margin per unit $30 $20 $24 Labor-hours per unit 4 5 4
Required: To maximize profits, how many units of each product
should Northern produce?
Product X
Product Y
Product Z
Contribution margin...
Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a...
Kaleb Konstruction, Inc., has the following mutually exclusive
projects available. The company has historically used a three-year
cutoff for projects. The required return is 14 percent.
Year
Project F
Project
G
0
–$133,000
–$203,000
1
61,000
41,000
2
49,000
56,000
3
59,000
89,000
4
54,000
119,000
5
49,000
134,000
a.
Calculate the payback period for both projects. (Do not
round intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)
b.
Calculate the NPV for...
Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a...
Kaleb Konstruction, Inc., has the following mutually exclusive
projects available. The company has historically used a three-year
cutoff for projects. The required return is 10 percent.
Year
Project F
Project G
0
−$195,000
−$298,000
1
98,400
71,600
2
86,300
94,500
3
81,600
123,600
4
72,000
166,800
5
64,800
187,200
Calculate the payback period for both projects.
Calculate the NPV for both projects.
Which project, if any, should the company accept?
The following three projects are available but because of resource limitations, only one can be done....
The following three projects are available but because of
resource limitations, only one can be done. The Do Nothing option
is also available and the company MARR is 15%. F0 F1 F2 F3 F4 F5 A
-$10,000 $5,000 $2,000 $2,500 $3,000 $3,100 B -$7,000 $2,000 $2,500
$3,000 $2,000 $1,000 C -$6,000 $2,000 $2,000 $2,500 $2,750 $3,000
a) Which project should be selected using ROR incremental analysis?
b) Which project should be selected using present worth incremental
analysis?
A company. has a project available with the following cash flows: Year Cash Flow 0 −$34,310...
A company. has a project available with the following cash
flows: Year Cash Flow 0 −$34,310 1 12,780 2 14,740 3 20,150 4
11,420 If the required return for the project is 8.6 percent, what
is the project's NPV?
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,910...
A company. has a project available with the following cash
flows:
Year
Cash Flow
0
−$31,910
1
13,080
2
14,740
3
20,850
4
12,020
If the required return for the project is 9.6 percent, what is the
project's NPV?
A company. has a project available with the following cash flows: Year Cash Flow 0 −$31,430...
A company. has a project available with the following cash
flows:
Year
Cash Flow
0
−$31,430
1
13,140
2
14,740
3
20,990
4
12,140
If the required return for the project is 9.8 percent, what is the
project's NPV?
$8,619.88
$29,580.00
$15,557.89
$19,396.85
$16,972.24
contains a list of available investment projects and their respective cash flows. Using a cost of...
contains a list of available investment projects and their
respective cash flows. Using a cost of capital of 10%, please
answer the following questions: 1- Find the payback period, net
present value and internal rate of return for each project. (Using
excel to do this will save you a lot of time). 2- Based on the
results, identify conflicts in ranking the above projects based on
the IRR and NPV approaches, i.e. a project that has a higher rank
using...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
ADVERTISEMENT