One of the international companies intends to open a project to produce solar energy in Mosul for a period of 8 years. The volume of investment in the project is (1,800,000) dollars, the annual revenues are estimated at (400,000) dollars, and the annual costs are (90,000) dollars. Calculate the project's internal rate of return, knowing that the discount rate is the lowest (10%) and the highest (20%) and whether the project is accepted or rejected. 10:39
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- You are given the cash flow series for two projects, Alt. A and Alt. B. YEAR 1 2 3 4 5 6 Alt. A - F1 X X X + S1 Alt. B - F2 Y Y Y Y Y Y + S2 Assume that F2 > F1, and X, Y, S1, and S2 are positive; the incremental rate of return (i*) on the additional investment in Alt. B can be calculated with the following expression: = - = - = - · F2 + Y (P/A, i*, 6) + S2(P/F, i*, 6) (F2 F1) + (Y - X)(P/A, i*, 5) + (S2 - S1)(P/F, i*, 6) (F2 F1)(F/P, i*, 6) + (Y - X)(F/A, i*, 6) + (S2 - S1) (F2 F1)+(Y - X) + (Y + S2) - (X + S1) 0 = (F1 F2)(F/P, i*, 6) + (X - Y)(F/A, i*, 6) + (S2-S1) == 0 = F1 + X(P/A, i*, 6) + S1(P/F, i*, 6) 0F2+Y(P/A, i*, 6) + S2(P/F, i*, 6) 0 = - 0 = - F1 + X(P/A, i*, 5) + S1(P/F, i*, 6) F2+ Y(P/A, i*, 5) + S2(P/F, i*, 6)A company is setting up a project to buld housing Units in which the investment volume is estimated at ane million dollars to build (100 houses), the price of the house is (20,000) dollars, to be paid in equal installiments for a periad of (4 years), the annual Costs are estimated at (50) thousand dollars. Calculate the Simple rate of returm, the payoack period and the internal rate of retum for the project, bearing in mind that the lowest discount hiahest is (12'%). Will the project be accepted or rejected. rate is (8b) and theIn 2021 I bought 1/3 of ACO's Sushi House at BAM for 550,000TL. After 3 years I sold half of my shares to Ali for 1,500,000TL. The next year, because of a new virus, the business did poorly and I decided to leave the sushi business but I had to pay mehmet 100,000TL to share our losses. What is the rate of return of my investment?
- You have been asked by the chief financial officer of your company to estimate what thecompany’s share price will be at the end of four years from today. Your company has recentlypaid a dividend of $1.00 which is expected to grow at 5% p.a. over the foreseeable future. Ifthe company’s required rate of return on equity is 10% your price estimate at the end of year 4will be closest to: A. $20.00.B. $21.00.C. $24.30.D. $25.50.A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. What is the exact rate of return? ANSWER: Blank 1 Blank 1 Add your answerYou are considering an open-pit mining operation. The cash flow pattern issomewhat unusual since you must invest in some mining equipment, conductoperations for two years, and then restore the sites to their original condition.You estimate the net cash flows to be as follows: N Cash flow 0 -$1,600,0001 1,500,0002 1,500,0003 -700,000 What is the approximate rate of return of this investment?(a) 25%(b)38%(c) 42%(d)62%
- A man is considering investing P500, 000 to open a semi-automatic auto-washing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it andto do small amount of hand work. The man plans to hire two men, inaddition to himself, and operate the station on an 8-hour basis, 6 days perweek, 50 weeks per year. He will pay his employees P25. 00 per hour. Heexpects to charge P25. 00 for a car wash. Out-of-pocket miscellaneouscost would be P8, 500 per month.He would pay his employees for 2 weeks for vacations each year.Because of the length of his lease, he must write off his investment within 5years. His capital now is earning 15%, and he is employed at a steady jobthat pays P25, 000 per month. He desires a rate of return of at least 20% onhis investment. Would you recommend the investment?a) Use ROR methodb) Use Annual Worth methodc) Use present worth methodd) Use future worth methode) Solve for the payback period and the…A start up business is considering two types of equipment - data are as follows: TYPE A ΤΥΡE Β First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. Using present worth cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2 Blank 1 Add your answer Blank 2 Add your answerA company that makes clutch disks for race cars has the annual net cash flows shown for one department. Year NCF, $1000 0 −65 1 30 2 84 3 −10 4 −12 (a) Determine the number of positive roots to the rate of return relation. (b) Calculate the internal rate of return. Is there a negative root? How is it treated? (c) Calculate the external rate of return using the return on invested capital (ROIC) approach with an investment rate of 15% per year (as assigned by your instructor, solve by hand and/or spreadsheet).
- ABC Inc is considering the purchase of new pulverizing equipment. The top management of the company has requested that you provide the net present value for the equipment being considered. The relevant data for the new equipment are presented below: First Cost $125,000 Annual Income 10,000 Annual Operating Cost 8,000 (The first year and increasing by $750 per year ) Property Taxes 5% of first cost Salvage Value 8% of first cost ABC Inc has a minimum attractive rate of return (MARR) of 4% and the equipment has an expected useful life of 6 yearsAmazing Airlines has the following customer metrics: Average customer relationship length: 8 years Average number of flights per customer per year: 2.5 Average cost per ticket: $600 Profit margin per customer: 8% The net CLV for Amazing Airlines is closest to? O $18,000 $960 $1260 O $12,0002. Two alternatives, a flexible manufacturing cell and fixed automation, have different cost and revenue characteristics as follows: Flexible Cell Fixed Automation Investment S2,500,000 б уears S800,000 in first year; increasing by $100,000 each year thereafter $300,000/year $1,500,000 3 years S800,000/year Life Gross cash savings s100,000 in the first year; decreasing to S80,000 in second year and S70,000 in third year Cash disbursement MARR 20% 20% Assuming "repeatability" and service needed for 6 years, show which alternative is preferred using the method of rate of return.