You are a financial analyst of ABC Company. The director of capital budgeting has asked you...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are a financial analyst of ABC Company. The director of capital budgeting has asked you to analyze two proposed capital investments, projects X and Y. Each project has a cost of Tk. 30,000 and the expected net cash flows are as follows: 7 Year 1 2 Expected Net Cash Flows Project Y Tk. (30,000) 8500 8500 8500 8500 i) Calculate the pay-back period for each project (Industry standard is 3.5 years) ii) If the required rate of return is 12 % then calculating the NPV for each project. iii) Calculate the profitability index for these projects. iv) Would you accept the project if they are independent? v) Which project should be accepted if they are mutually exclusive? 3 4 5 Project X Tk. (30000) 8000 12000 18000 21000 You are a financial analyst of ABC Company. The director of capital budgeting has asked you to analyze two proposed capital investments, projects X and Y. Each project has a cost of Tk. 30,000 and the expected net cash flows are as follows: 7 Year 1 2 Expected Net Cash Flows Project Y Tk. (30,000) 8500 8500 8500 8500 i) Calculate the pay-back period for each project (Industry standard is 3.5 years) ii) If the required rate of return is 12 % then calculating the NPV for each project. iii) Calculate the profitability index for these projects. iv) Would you accept the project if they are independent? v) Which project should be accepted if they are mutually exclusive? 3 4 5 Project X Tk. (30000) 8000 12000 18000 21000
Expert Answer:
Answer rating: 100% (QA)
Part i Payback period Payback period is the period in which initial investment is recovered If Cash Flows are Un Even Cash Flows PBP Year in which lea... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
discuss wind wave growth and wave propagation in coastal engineering.?
-
You recently went to work for Allied Components Company, a supplier of auto repair parts used in the after-market with products from Daimler, Chrysler, Ford, and other automakers. Your boss, the...
-
You have just graduated from the MBA program of a large university, and one of your favorite courses was "Today's Entrepreneurs." In fact, you enjoyed it so much you have decided you want to "be your...
-
Direct Materials Budget The MSC Company has anticipated its unit sales for the first half of 2022 as follows: 2022 Units January 12,000 February 14,000 March 15,000 16,000 17,000 18,000 April May...
-
A pendulum consists of a mass m suspended by a mass less spring with unexpended length b and spring constant k. Find Lagranges equations of motion.
-
Vijay runs a wholesale furniture business. All goods are sold on credit terms. He provided the following information at the end of his third year of trading: $ On 1 January 202: Inventory...
-
A pension fund has just paid some of its liabilities, and as a result of this transaction the fund is no longer fully immunized. The fund manager decides that instead of changing the portfolio, the...
-
Troyers long- term available- for- sale portfolio at December 31, 2012, consists of the following. Troyer enters into the following long- term investment transactions during year 2013. Jan. 13 Sold...
-
Design a power transmission system to connect a DC motor to its load. The motor is given in the motor catalogue as a BM1400 motor. You must create a transmission which will connect to this motor and...
-
Mr. Geoffrey Guo had a variety of transactions during the 2019 year. Determine the total taxable capital gains included in Mr. Guo's division B income. The transactions included:? 1. On January 1,...
-
Two ships, stranded in the middle of the ocean for decades, have become proficient in fishing and distilling water. Because both products are essential, each ship must choose how to distribute their...
-
Colt Systems will have EBIT this coming year of $18 million. It will also spend $7 million on total capital expenditures and increases in net working capital, and have $4 million in depreciation...
-
NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 17%. NatNah decides to increase its leverage to maintain a market debt-to-value ratio of 0.4. Suppose its debt...
-
Acort Industries owns assets that will have an 70% probability of having a market value of $52 million in one year. There is a 30% chance that the assets will be worth only $22 million. The current...
-
Discuss advantages and disadvantages of telecommuting.
-
List the tools and techniques for performing risk control.
-
The stress-strain curve for a brass alloy is provided below. The inset is a magnified view of the elastic regime of this stress-strain response. What is the approximate elastic modulus of this brass,...
-
Linda Lopez opened a beauty studio, Lindas Salon, on January 2, 2011. The salon also sells beauty supplies. In January 2012, Lopez realized she had never filed any tax reports for her business and...
-
Following is information for two stocks: Which investment has the greater relative risk ? Standard Investment Expected Return, f Deviation, a Stock D 10.0% 8.0% Stock E 36.0 24.0
-
Tanner Technologies Corporation (TTC) has been growing at a rate of 20 percent per year in recent years. This same growth rate is expected to last for another two years. a. If D0 = $1.60, rs = 10%,...
-
Suppose you own a call option that permits you to purchase 100 shares of the stock of Silicon Graphics for $15 per share any time during the next three months. Silicon Graphics has a current market...
-
In problem 49, when does the estate's taxable year end? problem 49, John Henry died on May 1, 2018. When does his final 1040 have to be filed?
-
John Henry died on May 1, 2018. When does his final 1040 have to be filed?
-
John and Mary Hughes file their income tax return on a calendar year basis. John dies on May 15, 2018. Mary remarries on July 4, 2018. Can Mary file a joint return with John for the taxable year 2018?
Study smarter with the SolutionInn App