Your company is considering five projects: Project Initial outlay Profitability index A 6 000 1.2 B 4

Fantastic news! We've Found the answer you've been seeking!

Question:

Your company is considering five projects: Project Initial outlay Profitability index

A 6 000 1.2

B 4 000 1.05

C 10 000 1.6

D 8 000 1.4

E 7 000 1.3

Project C and D are mutually exclusive, and the company has R20 000 available for investment. All projects can only be undertaken once and are divisible.

Required:

1. Which projects should be undertaken to maximise the NPV in the presence of capital constraints? What is the maximum NPV and initial outlay? (10)

2. If all projects can be undertaken, what is the level of NPV and initial outlay?

Posted Date: Oct 29, 2021 08:05 AM

See More Questions

The top management team at your company is considering outsourcing the supply management function. Do you support this idea? Why, or why not?
Your company is considering a machine that will cost $1,000 at Time 0 and which can be sold after 3 years for $100. To operate the machine, $200 must be invested at Time 0 in inventories; these funds...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: The projects are equally risky, and their cost of capital is 12%. You must make a...
(a) Find the first order fraction transformation where z 1 =,z 2 =0, z 3 =1 is thought to be w 1 =1, w 2 =i, w 3 =-1 each. (b) Find the anchor points of w=(z-1)/(z+1)
Given your answers to questions 2 and 3, a. What will be the function and goals of the Operations group (see Figure 11-1)? b. What will be the function and goals of the Development group? What job...
The Argentine one-year CD (deposit) rate is 13 percent, while the Mexico one-year CD rate is 11 percent and the U.S. one-year CD rate is 6 percent. All CDs have zero default risk. Interest rate...
Prepare an income statement and a common-sized income statement from the following information about the accounts of the Uzbekistan Timber Corporation (in Uzbekistani som). Sales Cost of goods sold...
Every 2 reeks, employees for a manufacturing firm submit their time cards to the supervisor, who reviews and approves them. They are the submitted to the payroll department. At that time, the human...
12. "New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice,...
Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" and small, standardized delivery boxes (which provides a 20%...
All bonds are semiannual with a face value of $1,000 You need to adjust the RATES and NPER for all bonds since they are semiannual 1. A bond has a coupon rate of 4% and makes semiannual payments. The...
Abbott placed into service a flexible manufacturing cell costing $$850,000$ early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be...
Michelin is considering going lights-out in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $$600,000$ per year are used to manually weigh real...
Perform a Web search on Modigliani-Miller Theorem and write (copy), in one or two sentences, the essence of their theory. This may best be done by looking at the Wikipedia summary.
A manufacturing system for fabricated metal products is purchased for $$800,000$ in the middle of the fiscal year. The estimated salvage value after 10 years is $$130,000. a. $ What is the...
A granary is considering a conveyor used in the manufacture of grain for transporting, filling, or emptying. It can be purchased and installed for $70,000 with $3,000 salvage value after 16 years....
Subject: Accounting Answer the following with complete and detailed solution. Use excel for better understanding and find the balances needed then prepare financial position and notes to financial...
What are three disadvantages of using the direct write-off method?
A candlestick chart is similar to a bar chart except that the candlestick chart: A. Represents upward movements in price with Xs. B. Also graphically shows the range of the periods highs and lows. C....
What considerations might encourage a market analyst to rely more on a top-down or bottom-up forecast of S&P 500 operating earnings?
Which of the following criticisms expressed by Ryan about the use of historical data is the least valid? A. In a context of hyperinflation, the approach may not be appropriate. B. The companies...

Your company is considering five projects: Project Initial outlay Profitability index A 6 000 1.2 B 4

Question:

Expert Answer:

Profitability index Net Present Value Initial Investment Initial Investment Therefore Profitability ... View the full answer

Students also viewed these business communication questions