Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project Life, Years Project First Cost Estimated Annual Savings W 12M 5M 3 25M 7.3М 4 Y 45M 12.1M 6 60M 9M Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (W/X/Y/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2 Blank 1 Add your answer Blank 2 Add your answer
Q: 4. A company has 80 million shares outstanding with an equity value of Kshs. 6 billion. The company ...
A: Capital restructuring is the process adopted by the companies to optimize their profitability or in ...
Q: Two scheduled debt payments of $671 each are due two months and nine months from now respectively. I...
A: Amortized Loan Amortized loan is a type of loan in which the borrower would pay periodic payments th...
Q: have the following data during the coming year. What is the firm's expected ROE?
A: The return on equity (ROE) is a financial metric that is calculated by dividing net income by shareh...
Q: Suppose that today's one-year interest rate is 5%. Consider the following one-year interest rates ex...
A: Here, Today's One Year Interest (r1) is 5% One year interest rate one year from now (f1 ) is 6% One ...
Q: Which of these statements about bond markets is TRUE? * Bond markets include both equity and d...
A: When Market rate of interest is higher than the coupon rate of interest, the bond will be issued at ...
Q: Both Bond Bill and Bond Ted have 10.6 percent coupons, make semiannual payments, and are priced at p...
A: We can calculate the current price of the Bond bill and Bond ted then will find the change in the pr...
Q: Find the accumulated value of P3,000 in 4 years if it is invested at 12% compounded quarterly.
A: Future value = Present value(1 + Rate)^Time where, Present value = P3,000 Rate = 12% / 4 = 3% Time =...
Q: WHAT IS THE MEANING OF FINANCIAL STATEMENT?
A: Financial statements are the written records of the business activities which show the financial pos...
Q: If Treasury bills are currently paying 6.45 percent and the inflation rate is 1.4 percent, what is t...
A: Formula for Approximate real rate = Nominal Rate - Inflation rate Formula for Exact Real Rate =( 1 +...
Q: All of the following can be used to achieve low costs EXCEPT: Availability of low-cost resources Eco...
A:
Q: A high-precision programmable router for shaping furniture components is purchased by Henredon for $...
A: Present worth is the difference between the present value of cash inflows and the present value of c...
Q: What is the interest earned on a P100,000 investment if it is held for 20 years at 4.3% simple inter...
A: Under simple interest, Total interest per year remains the same and there is no concept of interest ...
Q: A $87,000 mortgage is to be amortized by making monthly payments for 25 years. Interest is 8.7% comp...
A: Mortgage is a type of long-term credit which allows borrower to acquire asset by keeping same asset ...
Q: Using the simple interest formula, determine the number of days until $1256.00 will earn $22.14 inte...
A: Interest = $22.14 Principal amount = $1256 Interest rate = 8 1/4% = 8.25%
Q: Josephine is 20 years old and wants to save $1 million dollars for retirement in 50 years. Assume sh...
A:
Q: Leon's 6-month premium for auto insurance is $754.34, if he pays it all at once. If he decides that ...
A: In order to make the decision regarding the payment of insurance premium to be paid minimum, we are ...
Q: You are offered an investment with a quoted annual interest rate of 10% with weekly compounding of i...
A: The effective annual interest rate is the actual interest rate that we get if we take the frequency ...
Q: A new bridge across the Allegheny River in Pittsburgh is expected to be permanent and will have an i...
A: Data given: Initial cost =$ 30,000,000 Resurfaced cost = $1000,000 ( every 5 year) Annual inspection...
Q: A store plans on investing on a new grill oven that costs P100,000. It will generate revenues of P2,...
A: Net present value method(NPV): NPV considers time value of money and is used for analyzing profita...
Q: 6. DIVIDEND VALUATION MODEL (2) The Advantage Food Corporation paid a dividend of $1.36 last year an...
A: Solution:- As per dividend discount model (DDM), Cost of retained earnings = (D1 / P0 ) + g Where D...
Q: What is the present value of the following set of cash flows, discounted at 15.8% per year? Year 1 3...
A: The present value method is a method of finding the profitability of a project by discounting cash f...
Q: If you deposit $20,000 per year for 18 years (each deposit is made at the beginning of each year) in...
A:
Q: 3a) The company issues a note to an entity to borrow cash for five years and will pay $500,000 to th...
A: Present Value The present value is the value of cash flow stream or the fixed lump sum amount at tim...
Q: ica obtained a 3-year P40 000 discounted loan at 2% simple interest for her online business. ne disc...
A: Simple interest is interest without the compounding that there is no interest on interest available.
Q: Sumami Ink considers replacing its old machine. The old machine’s current market value is $2 million...
A: Cost of new machine in year 0 is $3,000,000 Book value of old machine = $1,000,000 Market price = $2...
Q: Given: P= Php 450, 500. 50 r= 3 %% t= October 20, 2003 - February 10, 2004 Solve for: _1. Approximat...
A: Actual no of days and Approximate no of days: Actual no of days is calculated by taking actual dif...
Q: Handley Bank advertises that its standard lending rate is 12% per annum compounding monthly. Which o...
A: The effective rate is the actual rate that we get if we take the frequency of compounding into consi...
Q: The work finance is defined as, except: a. The money management and the process of acquiring neede...
A: We know, the finance manager has the following functions:- I) Financing Decision II) Investing Decis...
Q: WHAT ARE THE IMPORTANCE OF FINANCIAL STATEMENTS?
A: Financial Statements are the Statements which records the activities of the business and depicts the...
Q: The aggregate expenditure for a simple economy in 2016 was $9 million. The table below shows spendin...
A: First, we will calculate the aggregate expenditure of the government which includes Consumption, Inv...
Q: You are a manager at Percolated Fiber, which is considering expanding its operations. Your boss said...
A: Depreciation is a non cash expenses. So this expense should be added back to calculate the free cash...
Q: A proposal to reduce oil spill on MX5 has a B-C ratio of 1.4. The conventional annual worth of benef...
A: Annual net benefits (P) = P560,000 Interest rate (i) = 6% Life of project (n) = 20 Years B-C ratio (...
Q: 1. Discuss the functions of financial intermediaries.
A: Financial intermediaries refer to those institutions and entities that serves the role of acting as ...
Q: Find the future value of −−P60, 000 invested for 10 years at 3% interest compounded monthly
A: Answer- Future Value Formula- FV = PV ( 1 + r/n) nt Given, PV = P 60000 r= 3% n = 12 nt = 12*1...
Q: The WSSU parking garage project: Last we checked, a parking garage costs $7,000 per spot. Suppose ca...
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...
Q: GN Bank just paid its investors a dividend of GH¢0.5. If the dividend will grow at 8% forever and th...
A: The Dividend Growth Model refers to a model that helps in calculating the intrinsic value of a stock...
Q: A press release issued today announced that Ingram Distribution has acquired Johnson Transport. The ...
A: This relates to mergers and acquisitions (M&A). After a M&A the acquiring company can contin...
Q: 1. Consider the costs and benefits of the following public projects shown in the table. Costs ($) Ye...
A: Benefit-cost Ratio is the relationship between benefits and costs. It is recommended to go with one ...
Q: Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner o...
A: Market value of crops = Production in tons x Market price per ton
Q: 5%, what amount must you donate to endow the scholarship?
A: Present Value of Perpetuity: It refers to the present worth of annual cash flows having an infinite...
Q: At December 31, GIII Co. reported accounts recelvable of $260,000 and an allowance adjustments. An a...
A: An allowance for uncollectible accounts is a contra account that nets against the total receivables ...
Q: Calculate dividend per share.
A: Dividend is a form of distributing profits of a company to its shareholders. Almost all the companie...
Q: (a) Determine the villager's optimal fishing strategy if they know that the current runs at random 6...
A: A payoff table gives the different options available for a project and probability of payoffs for al...
Q: Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.3 percent, a YT...
A: The price of bond will be sum of the present value future coupon payments and the present value of f...
Q: how the capital structure, cost of capital, and dividend decisions are related?
A: A dividend is a distribution of a portion of a corporation's earnings to a class of shareholders sel...
Q: PART II - Below are 2019 FMT Company Cash flow accounts. Increase in bonds 170.0 Net income 117.5 In...
A: Working Notes 1. Net cash provided by (used in) operating activities: Particular Amount Net I...
Q: Consider a 16-year, $1,000 par value, 4% annual-pay bond that is currently trading at a flat price o...
A: Here, Current flat price = $870.07 Face value = $1,000 Time in years = 16 years Interest rate = 4% T...
Q: lending of things/money to individuals or organizations that is expected to be paid back on acertain...
A: The term loan can be defined as the monetary assistance given to the borrower by a lender in conside...
Q: what should be the price of this European put option
A: Options are kind of derivative instruments. That is value of options is derived from the value of so...
Q: 3. Two different insurance agents present you two health insurance policies as follows. AIA: It cove...
A: Better insurance policy is one that provides you the maximum coverage. Reimbursement rate or insuran...
Step by step
Solved in 2 steps with 2 images
- In an unrelated analysis, you have the opportunity to choose between the following two mutually exclusive projects, Project T (which lasts for 2 years) and Project F (which lasts for 4 years): The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have a 10% cost of capital. (1) What is each projects initial NPV without replication? (2) What is each projects equivalent annual annuity? (3) Apply the replacement chain approach to determine the projects extended NPVs. Which project should be chosen? (4) Assume that the cost to replicate Project T in 2 years will increase to 105,000 due to inflation. How should the analysis be handled now, and which project should be chosen?Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years 12M 5M 3 25M 7.3M 4 Y 45M 12.1M 60M 9M 8. Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the not acceptable project accordingly/in sequence (W/X/Y/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2NEED HELP ASAP!! THANK YOU!! Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years W 12M 5M 3 X 25M 7.3M 4 Y 45M 12.1M 6 Z 60M 9M 8 Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (W/X/Y/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2
- a) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project. e) Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the project is independent project, how would your answer change in part (e) Note: I need only e,f no question answer. only e and fa) Calculate the payback period for each project. The maximum allowable payback period setby the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project c) Calculate the profitability index (PI) for each project d) Calculate the internal rate of return (IRR) for each project. e) Based on the answer in (a) – (d), explain briefly which project should be accepted. f) If the project is independent project, how would your answer change in part (e) Note: 1. I need only e,f no question answer. only e and f 2. No need excel formulaCompute NPV and IRR if the required return is 12 percent. Year CashFlow 0 -8,000 1 0 2 5,500 3 3,200 What is the “cross-over” rate of the following projects? Year Project A Project B 0 -1,400 -800 1 950 600 2 950 600 Sketch the NPV profile of the following project and show the multiple IRRs. Note that the project has two IRRs and the first one is at 25 percent. Year CashFlow…
- Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,300 $470 $570 $580 $360 $160 Payback: In years? Should the project be accepted or rejected?multiple choice accepted rejected*** By using the following table format, calculate: (a) Calculate the, the Payback Period, and the net Present Value of for each project. Calculation of Payback Period for each project: CUMULATIVE CASH FLOWS Project A Project B Project C £ £ £ Year 1 Year 2 Year 3 Year 4 Year 5 Payback Period (years and months) Calculation of Net Present Value for each project: Discount Factors Project A Project B Project C CF DCF CF DCF CF DCF £ £ £ £ £ £ Year 1 Year 2 Year 3 Year 4 Year 5 Total DCF Initial investment Net present value b) For each of the above methods of project appraisal recommend which project should be taken up. c) Using all the information gathered from the above techniques which…a) Use rate of return (ROR) analysis to determine which of the mutually exclusive projects listed below to select given a MARR of 12% per year. b) Confirm your answer to part (a) using Present Worth analysis.
- Consider the following project balances for a typical investment project with aservice life of four years: (a) Construct the original cash flows of the project.(b) Determine the interest rate used in computing the project balance.(c) Would this project be acceptable at a MARR of 12%?Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. REQUIRED Use the information given below to calculate the following: 5.1 Payback Period of both projects (expressed in years, months and days) 5.2 Net Present Value of both projects 5.3 Accounting Rate of Return (on average investment) of Project Ron (expressed to two decimal places) Internal Rate of Return (IRR) of Project Hob. Your answer must include the calculation of two net present values as well as the determination of the IRR expressed to two decimal places. INFORMATION 5.4 Trendy Manufacturers is investigating the possibility of investing in one of two projects. The net cash flows for the two competing investment opportunities are as follows: Year 1 2 3 4 5 Project Ron R560 000 R500 000 R400 000 R200 000 R50 000 Project Hob R340 000 R340 000 R340 000 R340 000 R340 000 Each project requires an initial investment of R1 200 000. A scrap value of R50 000 (not included…REQUIRED Use the information provided below to calculate the following: 5.1 Payback Period of both projects (expressed in years, months and days). 5.2 Accounting Rate of Return (on initial investment) of Project Spik (expressed to two decima places). 5.3 Net Present Value of both projects. 5.4 Internal Rate of Return of Project Spik (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Telco Ltd had to choose between purchasing machinery for two projects, Spik and Span, for which the following profits are forecast: Year 1 2 3 4 Spik R70 000 R70 000 R70 000 R70 000 Span R20 000 R60 000 R120 000 R70 000 Each project requires an investment of R800 000. Project Span is expected to have a scrap value of R40 000. The cost of capital is 12%. The straight-line method of depreciation is used. Ignore taxes.