A company has maximum capital to invest of 800,000. Five capital projects have been identified which...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company has maximum capital to invest of £800,000. Five capital projects have been identified which are of similar risk. The initial analysis shows the following: Required initial outlay Project No 1 No 2 No 3 NPV £298,000 £128,000 £240,000 £100,000 £400,000 £160,000 £160,000 £60,000 £798,000 £239,000 Projects cannot be postponed and multiples of the same project are not allowed. Required Profitability index 1.4295 1.4166 No 4 No 5 1.40 1.375 1.300 What is the optimal combination of projects to maximise NPV assuming (a) Projects are divisible? (include a working to demonstrate how the profitability index numbers have been calculated for one of the projects) (b) Projects are not divisible? A company has maximum capital to invest of £800,000. Five capital projects have been identified which are of similar risk. The initial analysis shows the following: Required initial outlay Project No 1 No 2 No 3 NPV £298,000 £128,000 £240,000 £100,000 £400,000 £160,000 £160,000 £60,000 £798,000 £239,000 Projects cannot be postponed and multiples of the same project are not allowed. Required Profitability index 1.4295 1.4166 No 4 No 5 1.40 1.375 1.300 What is the optimal combination of projects to maximise NPV assuming (a) Projects are divisible? (include a working to demonstrate how the profitability index numbers have been calculated for one of the projects) (b) Projects are not divisible?
Expert Answer:
Answer rating: 100% (QA)
A company has maximum capital to invest of 1800000 Five capital pro... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these accounting questions
-
Prepare Carissa Communications multi-step income statement for the year ended July 31, 2016. Carissa Communications reported the following figures from its adjusted trial balance for its first year...
-
Prepare Honeyglazed Hams, Inc's income statement for the year ended December 31 2012 and its balance sheet on that date. Let's start with the income statement. Honeyglazed Hams, Inc. Adjusted Trial...
-
The DesMaris Company had the following income statement for the month of November 2018: DesMaris Company Income Statement For the Month of November 2018 Sales ($60 10,000) $600,000 Cost of goods...
-
Simplify the given expressions. Express all answers with positive exponents. 25/7/7/4 2/3 a
-
This question continues from the previous problem, focusing on how risk premiums explain the gaps in living standards across countries. a. Investors worry about the rule of law in Turkey and also...
-
Are emotional expressions universal? To what extent are human emotions such as anger or jealousy similar or different around the world?
-
The North Atlantic Consortium of Nephrology Associations (NACNA) is made up of two professional societies, the North American Nephrologist Society (NANS) and the European Council on Nephrology (ECN)....
-
Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2016. The business acquired $44,000 cash from Busby and $66,000 from Beatty. During 2016, the partnership earned $42,000 in...
-
A company issued, 8 years ago, bonds with an annual coupon rate of 8% and a face value of $1000. The coupons are semi-annual and the maturity at the time of issue was 20 years. a. If the...
-
Skunk Hollow, Arkansas, is proud of their energy conservation program. They want to know how much energy they have saved. A sample of 40 houses reveals an average saving of 47.5 kilowatt hours per...
-
Explain product life-cycle reverse logistics support policy of a company for reclaiming value from recalled or returned or recycled or waste materials. The choice of which type of reverse logistics...
-
A hedge fund launches with $300m ($272m from LPs). The fund charges 1.5-20 and has 21bps of other expenses. Given the gross returns below, calculate the fund's performance - net returns annually over...
-
Mr. Luis Prez, today entered into a lease contract with the company Soluciones a tu Alcance. Mr. Luis Prez's accountant on the commencement date will include the lease payments in the measurement of...
-
7. What is the output of the following program? int a = 10; void main() 8. { int a 20; } cout < < a < < ::a; Consider the following program: int main() int k = 0; int j = 0; while (k == j) } int k;...
-
A section of the allied quality assurance publication 2070 request for government quality assurance captures information on deviation permits concessions and reporting. The information comes from...
-
Project Risk Analysis Break even Sensitivity The TitMar Motor Company is considering the production of a new personal transportation vehicle (PTV). The PTV would compete directly with the innovative...
-
1. ) You are given the following information for Gandolfino Pizza Co.: sales = $42,000; costs = $22,200; addition to retained earnings = $5,350; dividends paid = $1,800; interest expense = $4,600;...
-
6 (a) Briefly develop a mathematical model of the behaviour of a copper-twisted pair cable (b) Derive the magnetic energy from: w given that: K + w, where the - - k symbols have their usual meaning...
-
Using the Playtime Park information presented, do the following tasks. Playtime Park competes with Water World by providing a variety of rides. Playtime Park sells tickets at $60 per person as a...
-
At the beginning of the year, Dapper Advertising owed customers $2,400 for unearned revenue collected in advance. During the year, Dapper received advance cash receipts of $7,500 and earned $15,000...
-
Ten Toes Co. produces sports socks. The company has fixed costs of $75,000 and variable costs of $0.75 per package. Each package sells for $1.50. Requirements 1. Compute the contribution margin per...
-
A company with a price-earnings ratio of 14 has an earnings yield closest to: A. 7.14% B. 14.00% C. 92.86%
-
Which of the following is not produced by a company to communicate its financial results? A. Schedule 13D. B. Annual report. C. 10-K statement.
-
The role of the 8-K filing with the Securities and Exchange Commission is best described as to disclose: A. the annual report. B. executive compensation. C. holdings of beneficial owners.
Study smarter with the SolutionInn App