Berra, Inc. is currently considering a seven-year project that has an initial outlay or cost of $120,000. The future cash inflows from its project for years 1 through 7 are the same at $30,000. Berra has a discount rate of 11%. Because of capital rationing (shortage of funds for financing), Berra wants to compute the profitability index (PI) for each project. What is the PI for Berra’s current project?

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A: Internal rate of return can be defined as the capital budgeting technique which brings down the net…

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A: NPV = Present value of cashflows - Initial outlay PI = Present value of cashflows /Initial outlay

Q: White Lion Homebuilders is considering investing in a one-year project that requires an initial…

A: Initial Investment = 450,000 Floatation Cost = 2% * Initial Investment = 2%*450,000 = 9000 Cash…

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A: YEAR CASH FLOW      0  $                      (3,600,000.00) 1  $…

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A: Net Present Value- It is the difference between the present value of cash inflows and the present…

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Q: Calculate the net present value (NPV) of the project.

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A: Formulas:

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A: FORMULA:

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A: The NPV can be calculated as the Present Value of cash Inflows-Initial Cost

Q: Zebra fashions is evaluating a capital budgeting project that should generate $104,400 per year for…

A: Value of the project is equal to present value of the future cashflow. formula: value of project=pv…

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A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Haroldsen Corporation is considering a capital budgeting project that would require an initial…

A: Net present value is one of the project evaluation technique to analyze whether it is profitable.…

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A: Computation:

Q: You are considering a project with an initial cost of $7,500. What is the payback period for this…

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A:

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A: Cost of Capital is 5 years To Find: NPV IRR

Q: payback period for this project?

A: Payback period is the number of years required to fully recover the initial investment.

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A: Initial investment (I) = P 900000 Annual cashflow (A) = P 270000 n = 5 years MARR = 14% Let r = IRR

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A: Given:

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A: Profitability index is a technique to estimate the payoff from an investment or project. It is used…

Q: GoGo Inc. is considering a new project that requires an initial investment of $36140 and will…

A: Answer : Profitability Index = Present value of cash inflows / Present value of cash outflows

Q: XYZ is considering an investment which will cost $259,000. The investment produces no cash flows for…

A: Payback period is the period within which initial investment is recovered. Payback period = Years…

Q: Your company is considering funding two projects. Project A will cost the company $720,000, and…

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Q: Shan Co. is considering a four-year project that will require an initial investment of $12,000. The…

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A: Initial investment (I) = $5000 Base case cashflow = $12000 Probability of base case = 50% Best case…

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Q: Green Caterpillar Garden Supplies Inc. is considering a one-year project that requires an initial…

A: Amount required to be raised = Amount required/(1-flotation cost)

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Q: Delta Gamma Inc. is considering two investment projects, each of which requires an up-front…

A: "Since you have posted a question with multiple sub-parts, we have solved the first three for you.…

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A: Given: Year Cash Flows 0 -7500 1 1100 2 1640 3 3800 4 4500

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Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.