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- A company wants to invest $619,932 today. The expected returns in years 1, 2, and 3 are $244,539, $175,421, and $341,884, respectively. If the rate of return on investment must be at least 15%, and the probability of commercial and technical success are 0.89 and 0.86, respectively. What is the maximum expenditure justified that the company may spend?OLA #10.1 A manager is deciding between two marketing campaigns: Campaign A will generate net returns of $105,000 one year from now and $25,000 three years from now. Campaign B will generate net returns of $25,000 one year from now and $105,000 three years from now. The required rate of return is 7.00%. a. What is the Discounted Cash Flow (DCF) of Campaign A? b. What is the Discounted Cash Flow (DCF) of Campaign B? C. Which campaign is economically better for the company? Please reply using algebra with detailsOLA #10.1 A manager is deciding between two marketing campaigns: Campaign A will generate net returns of $105,000 one year from now and $25,000 three years from now. Campaign B will generate net returns of $25,000 one year from now and $105,000 three years from now. The required rate of return is 7.00%. a. What is the Discounted Cash Flow (DCF) of Campaign A? b. What is the Discounted Cash Flow (DCF) of Campaign B? C. Which campaign is economically better for the company? Kindly use all the decimals DO NOT ROUND
- A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm’s tax rate is 30%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $17 million to $18.7 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by b. What are the effects on cash flow, if variable costs increase to 45% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by5. A company wishes to go ahead with one of two mutually exclusive projects, but the profit outcome from each project will depend on the strength of sales demand, as follows. Strong demand Profit $ 80,000 60,000 Project 1 Project 2 Probability of demand 0.2 Moderate demand Profit $ 50,000 25,000 0.4 Weak demand Profit/(Loss) $ (5,000) 10,000 0.4The manager of a small firm wants to know which among the three different projects should the company enter into. Details of the three projects are as follows: JOJO GINA MARIA LORINDA KANOR Initial investment P 120,000 P 125,000 P 180,000 P160,000 P35,000 Net present value 25,000 24,000 45,000 35,000 10,000 Internal rate of return 10% 15% 12% 8% 9% Profitability index 1.21 1.19 1.25 1.22 1.29 If the management has a budget of P500,000 only, which projects would be undertaken? a. Jojo, Gina, Lorinda, and Kanor b. Gina, Maria, Lorinda, and Kanor c. Jojo, Maria, Lorinda, and Kanor d. Jojo, Gina, Maria, and Kanor
- Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of McFann Co.: McFann Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 4 Year 3 4,100 4,300 4,400 $30.31 $33.19 $30.00 $13.45 $14.02 $14.55 $41,670 $41,890 $40,100 Year 1 Year 2 Unit sales. 4,200 $29.82 Sales price Variable cost per unit $12.15 Fixed operating costs $41,000 This project will require an investment of $20,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecation at t=0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. McFann pays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be under the new tax law. Which of the following most closely approximates what…Consider the following information for Smart Products: total assets P1000; sales-P1540; net profit margin-12%; dividend payout ratio=40%; accounts payable=P308. If sales are forecast to increase 30%, the "short cut" estimate of external funds required (EFR) would be P________?A project currently generates sales of $14 million, variable costs equal 50% of sales, and fixed costs are $28 million. The firm's tax rate is 40%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $14 million to $15.4 million? (Input the amount as positive value. Enter your answer In dollars not In mllons.) Cash flow increases by s 420,000 b. What are the effects on cash flow, if variable costs increase to 60% of sales? (Input the amount as positive value. Enter your answer In dollars not In mlllons.)
- Q.3. Research and development manager associated a probability of success to 60% (0.6) with a research investment at time zero being successful and generating the need for an additional $300,000 development investment at the end of year 1, which is estimated to have a probability of 90% (0.9) of successfully generating profits of $200,000 per year for years 2 through 10, assuming a washout of escalation of operating cost and sales revenue. If failure occurs after the time zero research investment, a reclamation cost of $100,000 will be realized at the end of year 1. If failure occurs after year 1 investment, the salvage value will be $250,000 at the end of year 2 for equipment salvage. To achieve a before-tax ROR of 25% in this investment, use expected NPV analysis to determine how much money can we spent on research at time zero assuming the year 10 salvage value is zero. What is the risk-free project NPV valuation?Finally, assume that the new product line isexpected to decrease sales of the firm’s otherlines by $50,000 per year. Should this be considered in the analysis? If so, how?KYY Inc. has the following data on its 2020 financial statement Total sales 2,000,000 Profit 360,000 Beginning total sales Ending total sales 1,500,000 2,100,000 A project proposal showed additional investment of 800,000 that would generate 1,000, sales and controllable contribution margin of 120,000. What is the return on investment (ROI) of the project proposal? Should the proposal be accepted?