a) Make That Money Limited (MTM) is assessing the viability of two investment opportunities in Latin...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
a) Make That Money Limited (MTM) is assessing the viability of two investment opportunities in Latin America. The first project is in the retail industry and requires an initial outlay of US $115,000. The second project is in the business process outsourcing (BPO) sector and requires an initial capital outlay of US $140,000. The cost of capital for both projects is 7% and the cash inflows for each project are detailed in the table below. Year Retail BPO US $ US $ 49,000 56,000 46,000 39,000 0 34,000 35,000 24,000 36,500 Calculate each project's Payback period (4 marks) 11) Assuming that the projects are mutually exclusive, which project(s) would you recommend according to the Payback period? Why would you make this recommendation? (2 marks) Calculate each project's Net Present Value (NPV). (6 Marks) Assuming that the projects are independent, which project(s) would you recommend according to the NPV? Why would you make this recommendation? (2 Marks) Calculate each project's Discounted Payback Period. (6 Marks) 1) 123 4 LO a) Make That Money Limited (MTM) is assessing the viability of two investment opportunities in Latin America. The first project is in the retail industry and requires an initial outlay of US $115,000. The second project is in the business process outsourcing (BPO) sector and requires an initial capital outlay of US $140,000. The cost of capital for both projects is 7% and the cash inflows for each project are detailed in the table below. Year Retail BPO US $ US $ 49,000 56,000 46,000 39,000 0 34,000 35,000 24,000 36,500 Calculate each project's Payback period (4 marks) 11) Assuming that the projects are mutually exclusive, which project(s) would you recommend according to the Payback period? Why would you make this recommendation? (2 marks) Calculate each project's Net Present Value (NPV). (6 Marks) Assuming that the projects are independent, which project(s) would you recommend according to the NPV? Why would you make this recommendation? (2 Marks) Calculate each project's Discounted Payback Period. (6 Marks) 1) 123 4 LO
Expert Answer:
Answer rating: 100% (QA)
ANSWER Years Retail Retail C CF BPO BPO C CF 0 115000 115000 140000 140000 1 49000 66000 56000 84000 ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The introduction of a new product requires an initial outlay of $60 000. The anticipated net returns from the marketing of the product are expected to be $12 000 per year for 10 years. Find the rate...
-
A project requires an initial outlay of $10 000 and promises net returns of $2000 per year over a 12-year period. If the project has a residual value of $4000 after 12 years, what is the rate of...
-
A new factory at Arcata requires an initial outlay of $4.5 million to be paid immediately. The factory will last for eight additional years, after which it can be sold for a salvage value of...
-
The Illinois State University Alumni Association is having two Baseball Day events this year. The purpose of the events is to both foster relationships between ISU alums and to also raise money for...
-
Edward Waltz is the bookkeeper for Edminson Company. Edward has been trying to get the balance sheet of Edminson Company to balance. It finally balanced, but now hes not sure it is correct....
-
Boboli Co. wanted to promote its "California style" pizza, which it sold in supermarkets. The company contracted with Highland Group, Inc., to produce two million recipe brochures, which would be...
-
Source Today earned net income of \(\$ 60,000\) after deducting depreciation of \(\$ 4,000\) and all other expenses. Current assets decreased by \(\$ 3,000\), and current liabilities increased by...
-
1. As DIY Stores built its online presence, how well did it organize around its core capabilities? 2. DIY Stores is a large national chain. What impact did its size have on its agility? 3. How could...
-
Firm AAA has no debt and a cost of equity capital of 12% per year. Firm BBB is equivalent to firm AAA I. All ways except firm BBB has debt. Firm B's debt to equity ratio is 0.5 and interest rate that...
-
Alan and Angel Young are both 36 years old. Mr. Young recently accepted a new job making $93,000 a year and Mrs. Young is currently unemployed. The Youngs have two children (ages 4 and 2), a dog, and...
-
Questions for Each Setup Answer the following questions for Set Up B and Setup C. First answer questions for Set up B then answer all questions for Setup C (to help with grading). Then answer the...
-
On March 1, Lincoln sold merchandise on account to Metlock Company for $27,300, terms 1/10, net 45. On March 6, Metlock returns merchandise with a sales price of $3,000. On March 11, Lincoln receives...
-
You have been given the following information for XYZ (Pty) Ltd: Balance Sheet Income Statement 2022 2023 2022 2023 R' 000 R' 000 R' 000 R' 000 Non-current assets (carrying value) 250 270 Revenue 305...
-
In the readings this week Northouse identifies intelligence types and authentic leadership, whilst Coleman discusses what makes a great leader. Answer the following question: From the text and...
-
Question 1 A stakeholder analysis represents key project management roles and responsibilities. Task: Critically explain the meaning of this statement to a project team. In your explanation address...
-
1. What factors affect the price and yield of a bond in the secondary market? 2. How does the coupon rate of a bond impact its price and yield?
-
(1.12 Study the circuit in Figure 1.30, and answer the following questions: a. What logic gate type does the indicator represent? b. What is the status (ON/OFF) of the indicator if push buttons A and...
-
Determine the optimal use of Applichem's plant capacity using the Solver in Excel.
-
Companies often use ratios as a basis for planning. The technique is to assume the business being planned will achieve targeted levels of certain ratios and then calculate the financial statement...
-
Youre an investment advisor and have several well-off older people among your clients. One of these individuals, Charlie Haverty, steadfastly refuses to invest in companies that pay significant...
-
Describe bond pricing as two time value of money problems
-
The major reason that the difference and ratio estimation methods would be expected to produce audit efficiency compared to mean estimation is that the a. Number of members of the populations of...
-
Probability proportional to size sampling (PPS) is normally used when it is thought that the population contains a a. Few understatements. b. Large number of understatements. c. Few overstatements....
-
Vale has decided to use PPS sampling in the audit of a client's accounts receivable balances. Vale plans to use the following PPS sampling table: What sample size should Vale use? a. 120 b. 108 c. 60...
Study smarter with the SolutionInn App