a. Calculate the Net Present Value to the nearest $000 for Projects A and B if the relevant cost of capital is 8.2% b. Calculate the profitability index for both projects. c. If both projects are mutually exclusive, which project that you accept?
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- Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?Whispering Winds Company is considering a long-term investment project called ZIP. ZIP will require an investment of $130,000. It will have a useful life of four years and no salvage value. Annual cash inflows would increase by $81,000, and annual cash outflows would increase by $40,500. In addition, the company's required rate of return is 10% Click here to view the factor table (a) Calculate the net present value on this project. (If the answer is negative, use either a negative sign preceding the number eg-5,275 or parentheses es. (5,275), For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to O decimal places, eg. 5,275) Net present value $ Identify whether the project should be accepted or rejected. The project should be (b) Q Search 458 PMPRINTED NAME _____________________________________________ Project X Project Y PB (payback) DPB (Discounted Payback) NPV $ PI IRR% MIRR% EAA (NUS) $ CROSSOVER RATE % NPV $ (using crossover rate) If the projects are INDEPENDENT, which would you choose? WHY? _____________________________________________________________ If the projects are MUTUALLY EXCLUSIVE, which would you choose? WHY? _____________________________________________________________ When you would be INDIFFERENT between the projects? WHY? _____________________________________________________________ SIGNATURE _____________________________________________________
- Questior The Bornova Innovation Company has three emerging technology options to invest. The mvestment options and market conditions for these technologies are given below. Based on this information; Investment Options Market Conditions Investment Revenue Emerging Technology Cost Demand Forecasting Probability (1000TL) (1000TL) Strong 0.6 9000 A 8000 Weak 0.4 6000 Strong 0.7 8000 В 6500 Weak 0.3 5000 Strong 0.8 6000 5000 Weak 0.2 3000 a. Draw the decision tree, b. Find the expected monetary value (EMV) of each options c. Which technology option should be selected? Why?Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Alpha Year Inflow YO 0 Y1 0 Outflow 207,000 110,000 Netflow Year Inflow Outflow Netflow (207,000) YO 0 217,000 (217,000) (110,000) Y1 7,000 190,000 (183,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 161,000 0 161,000 Y4 191,000 0 191,000 Y5 205,000 48,000 157,000 Y5 205,000 38,000 167,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,033,000 425,000 608,000 Total 1,070,000 505,000 565,000 The NPV for Omega is The NPV for Alpha is The better project isYou are setting up the shown ONE-WAY data table to calculate the NPV of a hotel project at various rates of return (8.25% to 12.5%). What range would you highlight before selecting: Data → What-if Analysis → Data Table… Question 51 options: B15:C32 C14:C32 B14:B32 B14:C32
- For this question you need to attach a file in Excel with your calculations. What do we call the cost of capital at which the two projects have the same NPV? Find this cost of capital for projects X and Y below Project X: CFo= - $3,500; CF1 = $900; CF2 = $1,000; CF3 = $1,200; CF4 = $750; CF5 = $120. Project Y: CFo = -$3,000; CF1 = $700; CF2 = $900, CF3= $1,000; CF4 = $700.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 SDetermine the feasibility of below presented project using FW Method. Use MARR = 10% Note: Round off your answer to the NEAREST WHOLE NUMBER and show complete solution Answer the following: FW of Alt. A is $Blank 1 FW of Alt. B is $Blank 2 FW of Alt. C is $Blank 3 FW of Alt. D is $Blank 4 Select Alternative (Write only the letter if A,B,C or D) Blank 5
- A firm with a WACC of 10% is considering the following mutually exclusive projects: 1 2 3 5 + ㅓ Project 1 Project 2 -$300 $60 $60 $60 $175 $175 -$550 $250 $250 $150 $150 $150 Which project would you recommend? Select the correct answer. Oa. Both Projects 1 and 2, since both projects have NPV's > 0. Ob. Both Projects 1 and 2, since both projects have IRR's > 0. Oc. Project 2, since the NPV2 > NPV1. Od. Neither Project 1 nor 2, since each project's NPV NPV2.quiz is acceptung Question 1 (10 points) The Internal Rate of Return is a financial measure that allows us to estimate: a The nominal value of the returns on a project. b The profitability of a potential investment in a project. The variance of returns on a project. The median of the returns on a project. Next Page Once you click Next Page you will not be able to change you answer Support | Schoology Blog I PRIVACY POI JUN 30 MacBook AirA2. (PaybackandNPV)Threeprojectshavethecashflowsgivenhere.Thecostofcapitalis10%. a. Calculate the paybacks for all three projects. Rank the projects from best to worst based on their paybacks. Calculate the NPVs for all three projects. Rank the projects from best to worst based on their NPVs c. Why are these two sets of rankings different? YEAR 0 1 2 3 4 5Project 1 −10 4 3 2 1 5 Project 2 −10 1 2 3 4 5 Project 3 −10 4 3 2 1 10