A company has $200 000 to be invested on either project X or project Y with...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company has $200 000 to be invested on either project X or project Y with the following cash flows: Year Project X Project Y 1 2 3 4 5 $70 000 $10 000 $70 000 $30 000 $70 000 $60 000 $70 000 $132 000 $70 000 $40 000 The current cost of capital is 12% Required a) Calculate for each project the: i. Simple payback period Marks) ii. Discounted payback period Marks) iii. Net present value Marks) iv. Internal rate of return Marks) v. Profitability index Marks) b) Based on your results in (a) above, advice the firm. (6 Marks) (4 (6 (4 (10 (10 A company has $200 000 to be invested on either project X or project Y with the following cash flows: Year Project X Project Y 1 2 3 4 5 $70 000 $10 000 $70 000 $30 000 $70 000 $60 000 $70 000 $132 000 $70 000 $40 000 The current cost of capital is 12% Required a) Calculate for each project the: i. Simple payback period Marks) ii. Discounted payback period Marks) iii. Net present value Marks) iv. Internal rate of return Marks) v. Profitability index Marks) b) Based on your results in (a) above, advice the firm. (6 Marks) (4 (6 (4 (10 (10
Expert Answer:
Answer rating: 100% (QA)
SOLUTION To calculate the financial metrics for projects X and Y we will use the given cash flows an... View the full answer
Related Book For
Understanding Basic Statistics
ISBN: 9781111827021
6th Edition
Authors: Charles Henry Brase, Corrinne Pellillo Brase
Posted Date:
Students also viewed these accounting questions
-
Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...
-
Given the following cash flows for a capital project in Mango Cloths, calculate its payback period and discounted payback period. The required rate of return is 8%. Year 0 1 2 3 4 5 Cash Flow-50,000...
-
The net present value and internal rate of return desirability measures for two mutually exclusive investments being considered by Stockton Corporation to follow. Year NPV IRR R 161 14.60% S 138...
-
Junes Garden Supplies purchases merchandise on account from Lawn Supplies, Inc. The list price is $1,600, with a trade discount of 25 percent, terms 1/10, n/30. Junes Garden Supplies pays the amount...
-
Absalom Motorss 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 30 years are callable 5 years from now at a price of $1,050. The bonds sell at a price of $1,353.54, and the...
-
A merchant realizes a markup of $42 by selling an item at a markup of 37.5% of cost. The merchants overhead expenses are 17.5% of the regular selling price. At a promotional sale, the item was...
-
You push a blob of gelatin with a constant force of \(3.0 \mathrm{~N}\) across a wet table on which it slides easily. Because the blob shape distorts, its center of mass moves only \(30...
-
The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year: 2010 July 1. Issued $18,000,000 of five-year, 10% callable bonds dated July 1, 2010, at an effective...
-
Identifying what data is most valuable for an organization to achieve its goals using complex statistics to explain trends to an organization developing a dozen key performance indicators from...
-
What are the benefits of businesses? Can a business negatively affect society? Give one example of a business that is benefiting society and one example of a negative effect.
-
An existing biotechnology venture is seeking an infusion of $5 million to carry it to the next milestone. The company has a prototype of a device for using ultrasound to shatter kidney stones. The $5...
-
Hairdressing is an industry that is significantly all about making people look and feel great. In the past, the hairdressing industry focused its services on females, with male clients opting for...
-
1. Select an item or industry of your preference and answer the following questions by doing the analysis for that same item: Who will be the consumers that belong to the potential market? (Provide...
-
It is often said that public service employees are unmotivated to perform their duties. They are just interested in job security and the retirement benefits. The Honolulu Police Department is plagued...
-
Federal law outlawing a combination of interests such as a trust or a conspiracy that attempts to unreasonably constrain trade among states or with foreign nations. Significance: The Supreme Court,...
-
Hulu announced a price increase for their ad-free plan from $11.99 to $12.99 monthly. The ad-supported plan will increase in price from $5.99 to $6.99 monthly. This price increase will not affect the...
-
BRADFORD Ltd is starting up a new business on 1 January 20X0 and has provided you with the following information: Quarterly Utilities (payment due in March & June) Cash outlay on equipment (payable...
-
You purchase a bond with a coupon rate of 6.7 percent, a par value $1,000, and a clean price of $905. Assume a par value of $1,000. If the next semiannual coupon payment is due in two months, what is...
-
A random sample of size 81 has sample mean 20 and sample standard deviation 3. (a) Is it appropriate to use a Students t distribution to compute a confidence interval for the population mean ?...
-
A random sample is drawn from a population with = 12. The sample mean is 30. (a) Compute a 95% confidence interval for based on a sample of size 49. What is the value of the margin of error? (b)...
-
Consumer Reports stated that the mean time for a Chrysler Concorde to go from 0 to 60 miles per hour is 8.7 seconds. (a) If you want to set up a statistical test to challenge the claim of 8.7...
-
Study the density matrix and the partition function of a system of free particles, using the unsymmetrized wavefunction (5.4.3) instead of the symmetrized wavefunction (5.5.7). Show that, following...
-
Determine the values of the degeneracy discriminant \(\left(n \lambda^{3}ight)\) for hydrogen, helium, and oxygen at NTP. Make an estimate of the respective temperature ranges where the magnitude of...
-
Show that in the first approximation the partition function of a system of \(N\) noninteracting, indistinguishable particles is given by \[ Q_{N}(V, T)=\frac{1}{N ! \lambda^{3 N}} Z_{N}(V, T), \]...
Computing For Seniors In Easy Steps Updated For Windows 7 1st Edition - ISBN: 1840783990 - Free Book
Study smarter with the SolutionInn App