Question

We must create a manual to know how to evaluate a company project

-How to determine the initial investment of a project?

-Sales forecast?

Answer #1

Evaluating a project's initial investment

To evaluate if the project worth investing or how much at maximum can be invested in a project will be decided on the basis of comparing the initial cost with sum total of discounted cash flows that can be arised from the project from year to year. If the sum total of discounted cash flows is greater than the initial investment of the project, the project is expected to bring profit's to the investors or vice versa

For eg. Lets assume the project needs an initial investment of $1M and the expected cash flows are $100000 for the next 15 years. To take a decision regarding the investment we have to compare the discounted sum of $100000 for the next 15 years with the initial investment.

How does a business know when to create an invoice and when to
create a sales receipt? What are the key differences between an
invoice and a sales receipt? What industries would likely use
invoices over sales receipts and vice versa?

QuickBooks
How does a business know when to create an invoice and when to
create a sales receipt? What are the key differences between an
invoice and a sales receipt? What industries would likely use
invoices over sales receipts and vice versa?

3- If a small company invests $100,000 in a new project, how
much must the compay receive each year to recover the investment in
this project in 5 years? The real interest rate (i) is 5% per year
and the inflation rate (f) is 3% per year.

Given the following forecasted data, determine the number of
planes that the company must produce in order to break even, on
both accounting basis and NPV basis assuming 6years as life of
project. The project initial investment is $900 million, each plane
sold for $15.5 million, the variable cost is $8 million each plane,
the fixed cost is $150 million, the depreciation uses straight-line
method, tax rate is 40% and the company’s cost of capital is 10%.
Please explain work...

Given the following forecasted data, determine the number of
planes that the company must produce in order to break even, on
both accounting basis and NPV basis assuming 6years as life of
project.
the project initial investment is $900 million, each plane sold
for $15.5 million, the variable cost is $8 million each plane, the
fixed cost is $150 million, the depreciation uses straight-line
method, tax rate is 40% and the company’s cost of capital is
10%.
Please explain work...

A firm is considering a new four year project. To start the
project, the firm must purchase new equipment today for $300,000.
This equipment will be depreciated using a 7-year MACRS schedule.
The project will generate annual sales of $260,000. Annual expenses
for the project will be 40% of sales (excluding depreciation). The
project will require an initial investment in Net Working Capital
of $12,000 immediately (year 0). Going forward, the balance sheet
level of NWC will be 10% of...

Given the forecasted data, determine the number of
planes that the company must produce in order to break even, on
both accounting basis and npv basis. The 10-year project initial
investment is 1,000 million, each plane sold for 15 million, the
variable cost is 7 million each plane, the fixed cost is 150
million, the depreciation is the straight-line method, tax rate is
40% and the company's cost of capital is 12%. please show all
work.

How would the discount rate used to evaluate a replacement or
repair project, such as a leaky roof, be different from the
discount rate for an investment in a new product or service? Why
would the discount rates differ?

Question
Suppose a company has project X with
the following cash flows to evaluate.
Calculate NPV and Estimate the IRR of project X using the data
given at a cost of capital of
10%.
10 marks
Project
Y
Cash
flows
Year
K’000
0
(30,000)
1
2000
2000
150,000
140,000
Examine when you will payback initial cash outflow and also
apply how this helps us to implement Appraisal
process.
10...

eBook
The Butler-Perkins Company (BPC) must decide between two
mutually exclusive projects. Each project has an initial outflow of
$7,000 and has an expected life of 3 years. Annual project cash
flows begin 1 year after the initial investment and are subject to
the following probability distributions:
Project A
Project B
Probability
Cash Flows
Probability
Cash Flows
0.2
$6,250
0.2
$ 0
0.6
7,000
0.6
7,000
0.2
7,750
0.2
17,000
BPC has decided to evaluate the riskier project at 12% and...

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