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A project has the following cash flows. Determine the exact ROR for this project.
|
Item |
Cash Flow |
|
First cost, $ |
250,000 |
|
Annual Revenues, $/year |
16,000 |
|
Additional Revenue, year 20, $ |
600,000 |
|
O&M costs, $/year |
2,500 |
|
Life, years |
20 |
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- Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?*** 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…You are given the following cash flows for a project. Assuming a cost of capital of 12.84 percent. determine the profitability index for this project. Year 0 1 2 3 4 5 O 14981 O 1.68/7 O1.7508 1.6245 1.5613 Cash Flow -$1,115.00 $554.00 $622.00 $648 00 $426.00 $216.00
- 6. You are choosing between two projects. The cash flows for the projects are given in the following Data table ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$48 $27 $19 $22 $15 B −$100 $22 $39 $48 $62 The IRR for project A is __________________________%. (Round to one decimal place.) The IRR for project B is____________________________%.(Round to one decimal place.) If your discount rate is 5.4%, the NPV for project A is $_______________million.(Round to two decimal places.) If your discount rate is 5.4%, the NPV for project B is $______________ million.(Round to two decimal places.) NPV and IRR rank the two projects differently because they are measuring different things. ___________________is measuring value creation, while ___________________is measuring return on investment. Because returns do not scale with different levels of investment, the two measures may give different rankings when…The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000 c. What is the IRR of project 1?You are given the following cash flow information for Project A: Project A PV Outflows TV Inflows Year 0 -$150,000.00 1 $80,000.00 2 -$25,000.00 3 $50,000.00 4 $80,000.00 5 -$30,000.00 6 $75,000.00 -$150,000.00 $75,000.00 Totals Now assume that the project's cost of capital is 16.0 percent, but that its true reinvestment rate is 25.0 percent. Given this information, determine the difference between the project's net present value (NPV) and its modified net present value (MNPV). O $45,129.36 O $46,411.47 O $44,701.99 $45,556.73 $45,984.10
- A company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below: Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued? Why?Project L has cash flows of -$900 at time zero; $490 at time 1; $410 at time 2; $490 at time 3. Use WACC of 7%. Project K has original cost of -$2,000 at time zero; $300 at time 1; $ 850 at time 2: $700 at time 3; $1,200 at time 4. Use WACC of 7%. Find payback period for both projects Find NPV for both projects If the company favors projects with shorter paybacks, how much NPV will be forgone?Filter Corp. has a project available with the following cash flows: Year Cash Flow 0 −$15,900 1 5,300 2 6,600 3 6,000 4 4,400 What is the project's IRR?
- Consider the cash flows for the following investment projects. Assume that MARR=12%/year. A B 0 -PhP 1,000 -PhP 1,000 - PhP2,000 1 900 600 900 2 500 500 900 3 100 500 900 4 50 100 900 Which project should be selected using incremental analysis (AW method)? ANSWERS: AWA = PhP Blank 1 AWB = PhP Blank 2 AWc = PhP Blank 3 %3D AW (B-A) = PhP BIlank 4 AW (C-B) = PhP Blank 5 Investment Blank 6 (use capital letter) is better.There a project with the following cash flows: Year: 1, 2, 3, 4 Cash Flow: -$21,800 6,300 7,350 6,750 4,400 What is the payback period?The cost data for two projects are given below. (a) Draw the cashflow diagram of Project 1. (b) Determine the better alternative using the annual cash flow analysis. Project 1 Project 2 $200,000 $180,000 24,000 Initial cost Net Annual Benefit 30,000 Salvage value Life in years 45,000 20,000 13 10 MARR 6%