You are considering investment in a project with the following outcomes: State Probability Investment Return State 1 State 2 State 3 State 4 20% 35% 15% 30% -10% 5% 10% 12% What is the project's expected return? 3.54% 4.85% 5.73% 6.45% 7.54%
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- Refer to the table below to answer the following question. Project Initial Investment NPV P 200 22 Q 180 26 R 185 38 S 380 10 The project with highest Profitability Index is Project P Project Q Project R Project SQUESTION 1 You are considering investment in a project with the following outcomes: Investment Return -10% 5% 10% 12% State State 1. State 2 State 3 State 4 Probability 20% 35% 15% 30% What is the project's standard deviation? 4.85% 6.34% 7.96% 9.85% 10.34%Refer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
- rome =16 MENT I You are considering investing in a project with the following possible outcomes: Probability of Investment Returns States Осcurrence Economic Boom 15% 16% Economic Growth 45% 12% Economic Decline 25% 5% Depression 15% -10% Calculate the standard deviation for this investment. Select one: O a. 6.46% O b. 8.21% O C. 10.07% O d. 11.17% O e. 11.63% bp 近Which of the following statement is true? * IRR and discount rate all have the same meaning.... If BCR is less than zero, an investment to a conservation project is worthwhile.... Both of them are trueQuestion 3 Given 10% discount rate, what is the profitability index of the investment project described below? 1.00 0.90 0.95 1.03 1.09 Question 4 What is the best method to use when expressing investment profitability as a percentage? Pick from the answers given below. Payback period Discounted payback period NPV AAR IRR
- A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18You are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Returns State 1: Economic boom 18% 20% State 2: Economic growth 42% 16% State 3: Economic decline 30% 3% State 4: Depression 10% -25% Calculate the expected rate of return and standard deviation of returns for this investment, respectively. O 7.35%, 12.99% O2.18%, 1.69% O 8.72%, 12.99% O3.50%, 1.69%Which project should you invest in according to the NPV and IRR? Project A NPV@ 10% WACC = $135 and IRR 22% Project B NPV @ 10% WACC = $17 and IRR 21% Project C NPV @ 10% WACC = $146 and IRR 23% O a Project A O b. Cannot determine Oc. Project C O d. Project B O e. Project A or B
- Exercise #3: Decision Trees and Expected Monetary Value (EMV) Question 1: Which project you will choose based on EMV estimation? Why? (Show your calculations) Project Chance Gain or Loss Use for calculations Project A 30% Lose 30,000. 40% Gain 55,000. 30% Lose 15,000. Project B 75% Gain 55,000 25% Lose 150,000. Project C 40% Gain 50,000. 60% Lose 20,000. The best project is:Question 2 Compute the B/C ratio at i-10%, for the following project and justify if you selected it or not, based on economic view point (Banefits) $30 $30 $ 20 $ 20 $5 $5 $8 $8 $10 $10 (Recurring costs) (Investment)Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment Project A Project B 12000 4150 5260 Project C 12000 12000 1200 3100 5225 3 4 Assume a discount Rate of 5.45 % 3800 4600 7360 9460 8250 9275 9300 Use the information above and help the management in choosing the most desirable Project using Payback period