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- Consider the following financial data for an investment project:• Required capital investment al n = 0: $ 100,000• Project service life: I 0 yea rs• Salvage value at N = I 0: $15,000• Annual revenue: $150.000• Annual O&M costs (not including depreciation): $50.000• Depreciation method for tax purpose: seven-year MACRS• Income tax rate: 40%.Determine the project cash flow at the end of year lO.(a) $69.000(b) $73.000(c) $66.000(d) $67.000You are given the following data for a project that is to be evaluated using the APV method. Year EBIT CAPEX Depreciation Increase in NWC Year-end net debt $80,000 O $201.765 O $185,617 O $193,822 0 O$222,872 Cost of net debt-8% Unlevered cost of capital = 11.8% Corporate tax rate = 30% Calculate the total value of the project at t = 0, using the APV method. O $213,918 1 $127,000 $60,000 $72,000 $50,000 $100,000 2 $133,000 $40,000 $80,000 $60,000 $140,000 3 $138,500 $10,000 $84,000 $30,000 $140,000You are given the following financial information related to a capital investment project. What is the project's Year 1 Net Cash Flow? Sales revenues Depreciation Other operating costs Interest Exp Tax rate WACC Select one: a. $8,580 b. $8,900 c. $9,350 d. $9,463 e. $9,832 $22,250 $8,000 $12,000 $800 40.0% 12.0%
- Use the following information for problems 1 to 5. Assume that the projects are mutually exclusive. Year Cash Flow (A) Cash Flow (B) 0 ($525,600) ($425,600) 1 $323,100 $235,900 2 $180,200 $163,900 3 $145,000 $135,000 4 $88,220 $79,000 What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct? If the required return is 13 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule? Over what range of discount rates would the company choose Project A? Project B? At what discount rate would the company be indifferent between these two projects? Explain. Compute the payback period for each project. Compute the profitability index for each project.Bruin, Incorporated, has identified the following two mutually exclusive projects: Cash Flow (A) Cash Flow (6) -$ 28,000 -$ 28,000 3,900 9,300 Year 0 1 2 3 4 Project A Project B a-1 What is the IRR for each of these projects? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) AN 13,400 11,300 8,700 4,600 Using the IRR decision rule, which project should the company accept? Project A Project B Ⓒ Project A O Project B Is this decision necessarily correct? 14,200 15,800 O No b- If the required return is 10 percent, what is the NPV for each of these projects? (Do 1. not round Intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Which project will the company choose if it applies the NPV decision rule? O Project A O Project B Discount rate c. At what discount rate would the company be Indifferent between these two projects? (Do not round Intermediate calculations and enter your answer as a…The following data concern an investment project (Ignore income taxes.): Investment in equipment Annual net cash inflows $ 215,000 $ 56,000 $ 70,700 $ 27,000 Salvage value of the equipment Working capital required Life of the project Required rate of return 5 years Net present value 12% The working capital will be released for use elsewhere at the conclusion of the project. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: Compute the project's net present value. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.
- Compute for the benefit ratio of the following projects. Project cost Gross income Operating cost Life of project Interest rate O a. 1.20 O b. 1.70 O c. 1.07 O d. 1.02 5,000,000 2,000,000 1,000,000 20 years 10%Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$29,700 -$29,700 15,100 4,650 13,000 10,150 9,550 15,900 5,450 17,500 0123 + 4 a-1 What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Project A Project B a-2 Using the IRR decision rule, which project should the company accept? Project A O Project B % % 2 lo this decisi orrect: According to the data given in the table below and to the annual equivalent expenditure method, which project should be preferred? Cash flows Project A Project B Project C Investment Amount (TL) 1500000 3475000 5900000 Operating expense (TL / year) Salvage Value (TL) Economic life of the project (years) Discount rate (%) 750000 500000 300000 250000 150000 100000 20 18 15 20 18 15
- Bridgeport Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $260,084 $46,590 Project A 7 years $0 Project B Click here to view the factor table. Bridgeport Company uses the straight-line method to depreciate its assets. B $278,237 Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25125. Round answers to O decimal places, e.g. 15%.) $44,540 9 years $0 Internal rate of return % %The following information related to a real estate asset investment that is fully financed using REITS equityProject costs:Land. Ksh 300000Buildings. Ksh 2500000Total costs. Ksh 2800000Operating data:Initial rent Ksh 522100Growth in rent. 8% per yearVacancy rate. 6% of gross rentOther income. 1% of gross rentOperating expenses. 16% of gross rent for one yearGrowth in expenses. 7% per yearGrowth in resale price. 6%Selling expenses. 5% of resale priceDepreciation (straight line 27.5 years, mid-month convention Put at service at beginning of the year)Holding period. 5 yearsMarginal tax rate. 30%Capital gains tax rate. 15%Depreciation recovery tax rate. 25%Estimated sale price. Ksh 3747032Selling expenses. Ksh 187352 Required:a). Operating cash flows for the first 5 yearsb). After tax cash flows from the sale of propertyc). Net present value assuming cost of capital of 15%d). What are the factors that will be considered before investing in the assetThe following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project Z Amount of investment $64,000 $84,000 Useful life 4 years 9 years Estimated residual value 0 0 Estimated total income over the useful life $8,960 $43,470 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A % Project Z %