Access Part II of the IG009 Assessment Scenarios document. As
the new product development manager, you...
Access Part II of the IG009 Assessment Scenarios document. As
the new product development manager, you are considering investment
proposals for two mutually exclusive investment opportunities. The
two proposals must be evaluated using net present value (NPV),
accounting rate of return (ARR), internal rate of return (IRR), and
payback. Review the cash flow information in the “Investments”
section of the Assessment Scenarios document, and then analyze the
investment proposals using Excel or another spreadsheet software to
calculate NPV, ARR, IRR,...
RejuveNation needs to estimate how long the payback period would
be for their new facility project....
RejuveNation needs to estimate how long the payback period would
be for their new facility project. They have received two proposals
and need to decide which one is best. Project Weights will have an
initial investment of $200,000 and generate positive cash flows
of
$100,000 at the end of year 1,
$75,000 at the end of year 2,
$50,000 at the end of 3, and
$100,000 at the end of year 4.
Project Waters will have an initial investment of...
Cost: $10,000
Annual cash inflow: $2,000
Life: 6 years
Cost of capital: 13%
Given the information...
Cost: $10,000
Annual cash inflow: $2,000
Life: 6 years
Cost of capital: 13%
Given the information above, which of the following statements
is the least accurate and why?
a. The NPV is -$2004.90; reject the project
b. The IRR is 5.47%; reject the project
c. Payback period is 5 years
d. Discounted payback period is 4.5 years
A proposed investment has a project life of four years. The
necessary equipment will cost of...
A proposed investment has a project life of four years. The
necessary equipment will cost of $1,200, and have a useful life of
4 years. The cost will be depreciated straight-line to a zero
salvage value, but will have a market worth $500 at the end of the
project’s life. Cash sales will be $2,190 per year for four years
and cash costs will run $670 per year. Fixed cost is $176 per year.
The firm will also need to...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR and PayBack Period
1) Life Period of the Equipment = 4 years
8) Sales for first year (1)
$ 200,000
2) New equipment cost
$ (200,000)
9) Sales increase per year
4%
3) Equipment ship & install cost
$ (25,000)
10) Operating cost:
$ (120,000)
4) Related start up cost
$ (5,000)
(60 Percent of Sales)
-60%
5) Inventory increase
$ 25,000
11) Depreciation (Straight Line)/YR
$ (60,000)
6) Accounts Payable...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR and PayBack Period
1) Life Period of the Equipment = 4 years
8) Sales for first year (1)
$ 200,000
2) New equipment cost
$ (200,000)
9) Sales increase per year
4%
3) Equipment ship & install cost
$ (25,000)
10) Operating cost:
$ (120,000)
4) Related start up cost
$ (5,000)
(60 Percent of Sales)
-60%
5) Inventory increase
$ 25,000
11) Depreciation (Straight Line)/YR
$ (60,000)
6) Accounts Payable...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR...
1. Learning Objectives
(a) Develop proforma Project Income
Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR and PayBack Period
1) Life Period of the Equipment = 4 years
8) Sales for first year (1)
$ 200,000
2) New equipment cost
$ (200,000)
9) Sales increase per year
4%
3) Equipment ship & install cost
$ (25,000)
10) Operating cost:
$ (120,000)
4) Related start up cost
$ (5,000)
(60 Percent of Sales)
-60%
5) Inventory increase
$ 25,000
11) Depreciation (Straight Line)/YR
$ (60,000)
6) Accounts Payable...
(a) Develop
proforma Project Income Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV,...
(a) Develop
proforma Project Income Statement Using Excel Spreadsheet
(b) Compute Net Project Cash
flows, NPV, IRR and PayBack Period
(c) Develop Problem-Solving
and Critical Thinking Skills
1) Life Period of the
Equipment = 4 years
8) Sales for first year (1)
$ 200,000
2) New equipment cost
$ (200,000)
9) Sales increase per year
5%
3) Equipment ship &
install cost
$ (35,000)
10) Operating cost:
$ (120,000)
4) Related start up cost
$ (5,000)
(60 Percent of...
Variables
Project 236
Project 264
Interest Rate
12.5%
12.5%
MARR
15%
15%
Project Life (years)
15...
Variables
Project 236
Project 264
Interest Rate
12.5%
12.5%
MARR
15%
15%
Project Life (years)
15
15
Cash Flows/Year
0
(64,000)
(58,000)
1
12,500
11,589
2
12,500
11,995
3
12,500
12,414
4
12,500
12,849
5
12,500
13,299
6
12,500
13,764
7
12,500
14,246
8
12,500
14,744
9
12,500
15,260
10
12,500
15,795
11
12,500
16,347
12
12,500
16,920
13
12,500
17,512
14
12,500
18,125
15
12,500
18,759
ACB Manufacturing is
analyzing investment decisions.
Two projects are
evaluated using the ...
A company is considering the following investment opportunities:
Project A Initial cost = $5,500,000 Expected life...
A company is considering the following investment opportunities:
Project A Initial cost = $5,500,000 Expected life = 10 yrs NPV =
$340,000 IRR = 20%
Project B Initial cost = $3,000,000 Expected life = 10 yrs NPV =
$300,000 IRR = 30%
Project C Initial cost = $2,000,000 Expected life = 10 yrs NPV =
$200,000 IRR = 40%
If the company has a WACC of 15% and the company is using
capital rationing with a fixed capital budget of...