Contract Manufacturing, Inc. is considering two alternative investment proposals. The first proposal calls for a major renovation
Question:
Contract Manufacturing, Inc. is considering two alternative investment proposals. The first proposal calls for a major renovation of the company€™s manufacturing facility. The second involves replacing just a few obsolete pieces of equipment in the facility. The company will choose one project or the other this year, but it will not do both. The cash flows associated with each project appear below, and the firm discounts project cash flows at 15%.
Rank these investments based on their NPVs.
Rank these investments based on their IRRs.
Why do these rankings yield mixed signals?
Transcribed Image Text:
Year Renovate Replace 0 -S9,000,000-S1,000,000 1 3,500,000 60,000 3,000,000 500,000 3,000,000 4,000 300.000 200,000 2,800,000 5 2,500,000
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 58% (12 reviews)
Project NPV IRR Renovate 1128309 205 Replace 433779 361 The Renovate project has a higher NPV ...View the full answer
Answered By
Ashington Waweru
I am a lecturer, research writer and also a qualified financial analyst and accountant. I am qualified and articulate in many disciplines including English, Accounting, Finance, Quantitative spreadsheet analysis, Economics, and Statistics. I am an expert with sixteen years of experience in online industry-related work. I have a master's in business administration and a bachelor’s degree in education, accounting, and economics options.
I am a writer and proofreading expert with sixteen years of experience in online writing, proofreading, and text editing. I have vast knowledge and experience in writing techniques and styles such as APA, ASA, MLA, Chicago, Turabian, IEEE, and many others.
I am also an online blogger and research writer with sixteen years of writing and proofreading articles and reports. I have written many scripts and articles for blogs, and I also specialize in search engine
I have sixteen years of experience in Excel data entry, Excel data analysis, R-studio quantitative analysis, SPSS quantitative analysis, research writing, and proofreading articles and reports. I will deliver the highest quality online and offline Excel, R, SPSS, and other spreadsheet solutions within your operational deadlines. I have also compiled many original Excel quantitative and text spreadsheets which solve client’s problems in my research writing career.
I have extensive enterprise resource planning accounting, financial modeling, financial reporting, and company analysis: customer relationship management, enterprise resource planning, financial accounting projects, and corporate finance.
I am articulate in psychology, engineering, nursing, counseling, project management, accounting, finance, quantitative spreadsheet analysis, statistical and economic analysis, among many other industry fields and academic disciplines. I work to solve problems and provide accurate and credible solutions and research reports in all industries in the global economy.
I have taught and conducted masters and Ph.D. thesis research for specialists in Quantitative finance, Financial Accounting, Actuarial science, Macroeconomics, Microeconomics, Risk Management, Managerial Economics, Engineering Economics, Financial economics, Taxation and many other disciplines including water engineering, psychology, e-commerce, mechanical engineering, leadership and many others.
I have developed many courses on online websites like Teachable and Thinkific. I also developed an accounting reporting automation software project for Utafiti sacco located at ILRI Uthiru Kenya when I was working there in year 2001.
I am a mature, self-motivated worker who delivers high-quality, on-time reports which solve client’s problems accurately.
I have written many academic and professional industry research papers and tutored many clients from college to university undergraduate, master's and Ph.D. students, and corporate professionals. I anticipate your hiring me.
I know I will deliver the highest quality work you will find anywhere to award me your project work. Please note that I am looking for a long-term work relationship with you. I look forward to you delivering the best service to you.
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Question Posted:
Students also viewed these Corporate Finance questions
-
Cost of Capital and Capital Budgeting Cummins Engines, Inc. is considering two alternative investment proposals. The first proposal calls for investment in plant and equipment to produce a new...
-
The central bank is considering two alternative monetary policies: Holding the money supply constant and letting the interest rate adjust, or Adjusting the money supply to hold the interest rate...
-
The following information relates to the debt investments of Wildcat Inc. during a recent year: 1. On February 1, the company purchased Gibbons Corp. 10% bonds with a Face Value of $300,000 at 100...
-
Explain what quality management knowledge and skills an auditor should possess when auditing
-
Illustrate using examples the differences between findings, conclusions and recommendations in research
-
In each case, show that T is an isometry of R3, determine the type (Theorem 6), and find the axis of any rotations and the fixed plane of any reflections involved. (a) (b) (c) (d) (e) (f) abc 3 2b a...
-
Show that the least-squares estimate of \(\boldsymbol{\beta}\) (say \(\hat{\boldsymbol{\beta}}_{(i)}\) ) with the \(i\) th observation deleted can be written in terms of the estimate based on all...
-
General Disclosures; Inventories; Property, Plant, and Equipment Koch Corporation is in the process of preparing its annual financial statements for the fiscal year ended April 30, 2011. Because all...
-
A call center has four categories of employees, each paid a particular wage. Managers are paid $25 an hour, clerks are paid $15 an hour, technicians are paid $20 an hour, and administrative...
-
Consider a 4-year 10% coupon bond with nominal capital 100. You can 'strip off the coupon payments - the first due in exactly one year, the second in two years, the third in three years and the final...
-
William Industries is attempting to choose the better of two mutually exclusive projects for expanding the firms production capacity. The relevant cash flows for the projects are shown in the...
-
Consider a project with the following cash flows and a firm with a 15% cost of capital. YearCash Flow 0.............$20,000 1.............. 50,000 2................. 10,000 a. What are the two IRRs...
-
What is the wheel of retailing? What are two approaches that a retailer could take to avoid being trapped by it?
-
The skier is going down a 3 0 - degree grade. His mass with his equipment is 8 9 kg . Using a drag coefficient of 0 . 7 8 , an area of 1 . 1 m 2 , and an air density of 0 . 8 4 kg / m 3 will be his...
-
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000;...
-
If a bridge with steel expansion joints expands 0.30 m on a hot day (T = 25C), what is the original length of the bridge? Convert your answer from meters to kilometers
-
A 5 0 0 kg milk truck is moving west at 1 2 m / s . At the same time, a 6 kg tricycle is being driven at 6 5 deg N of E with a velocity of 1 5 m / s . The two vehicles collide and become fused...
-
What is a common mode of decay for radioactive nuclides in which the mass number changes? Explain
-
A project manager provides a verbal set of instructions to two team members on how to perform a specific test. Without agreeing or disagreeing with the project manager, the two employees leave the...
-
On March 31, 2018, Gardner Corporation received authorization to issue $30,000 of 9 percent, 30-year bonds payable. The bonds pay interest on March 31 and September 30. The entire issue was dated...
-
Unidirectional flows can also be posed as \(v_{x}\) as a function of \(y\) and \(z\). A flow in a square duct (away from the entrance region) is an example. How does the Navier-Stokes equation...
-
Three years ago, you founded your own company. You invested $100,000 of your money and received 5 million shares of Series A preferred stock. Since then, your company has been through three...
-
Do underwriters face the most risk from a best-efforts IPO, a firm commitment IPO, or an auction IPO? Why?
-
What is IPO underpricing? If you decide to try to buy shares in every IPO, will you necessarily make money from the underpricing?
-
The organization that Mike works in finds that one of their domains is directing traffic to a competitors website. When Mike checks, the domain information has been changed, including the contact...
-
A degree 7 function has a cubic root at -3, a double root at -1, and linear roots at 1 and 3. a) Determine the equation of the family. b) Determine the equation of the member with a y intercept at...
-
Find the basic cost (ignoring any broker fees) for 500 shares of Driven Bank (DRBN), at the day's closing price. Click the icon to view the stock table. The basic cost for 500 shares of Driven Bank...
Study smarter with the SolutionInn App