QSO 420 3-2
.docx
keyboard_arrow_up
School
Southern New Hampshire University *
*We aren’t endorsed by this school
Course
420
Subject
Accounting
Date
Apr 3, 2024
Type
docx
Pages
5
Uploaded by MegaStarAlpaca3 on coursehero.com
Southern New Hampshire University
QSO 420:3-2 Final Project Milestone One
Prof. Smith
Soucie, Joseph
3-30-2024
Basic Elements
Here is the introduction to the basic elements of earned value (EV), planned value (PV) actual cost (AC) & budget at completion (BAC) and where they can be found on the project charter. First taking a look at EV, earned value is the percentage of the total budget of the project at the time of completion. Earned value is also known as the budgeted cost of work performed or
BCWP. To calculate EV by multiplying the budget of the project work or activity by the percentage of the progress completed on the project activity or work completed
(Lukas, J. A. 2012)
. Next, Planned Value is the budget for the work that has been scheduled to be completed. This is the portion of the project that the capital that has budgeted to be spent at the given time during the duration of the project. This is also referred to budgeted cost of work schedule or BCWS
(Lukas, J. A. 2012)
. Then, looking at the actual cost of the project, simply the actual cost is the capital or money spent for the work completed on the project. Actual cost is also referred to actual cost of work performed or ACWP
(Lukas, J. A. 2012)
. Finally, the budget at completion
is the total approved budget when the scope of the project is done to completion, barring any project contingencies or project incidents. When examining the project charter the planned value,
earned value, and actual cost are at the top of the charter showing the current capital utilized and the cumulative capital used for the project and the budget at completion subject line is just below
the cumulative of the PV, EV, and AC displaying the project capital spent (
Earned Value Reporting
, n.d.).
Analyze
After reviewing the case study of the Clothes ‘R’ Us project charter, what I found is the project of managing the IT project, ran from through all of 2002 and six months into 2003. What I found interesting is in July of 2002 and September 2002 the project had requirements freeze on the project which is why the project ran into six months of 2003. Also looking over the project charter I also found that during the project the inventory cost grew during the project duration receiving in inventory also training on the new IT setup didn’t start up into four months into the project training new hires to effectively use the new software. At the end of the project, the Software and Hardware purchase and maintenance of the software and hardware didn’t exceed the total amount since there was the freeze in July and September. If the project would have continued, I believe the project would have finished sooner but would have gone over budget.
Earned Value
Discussing some of the methods of how to determine earned value, the first method is the
figuring throughout the project using the percent through percent finish method some of examples of this is the 50/50, 25/75,80/20, and the 0/100 method. Some of the variance of this methods include the percent complete earned value method, weighted milestone method, combining the two with weighted milestones with percent complete earned value method, and finally units completed EV method, this is when you have physical units to measure. The other two methods are apportioned effort earned value method and the level of effort earned value method (Blázquez & Blázquez, 2020). Apportioned effort is the method of planning and measuring the EV for the effort that is related in direct proportion to measure effort (
Apportioned
Effort
, n.d.). The level of Effort method refers to the activities that are the managers overhead of continuing a project that does not produce or manufacture and specific products of a project.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Table 1: The Planned Value of Work Done Schedule
Jan
Feb
March
Project A
Project B
Project C
Project D
60,000
100,000
80,000
120,000
100,000
80,000
80,000
120,000
120,000
120,000
70,000
100,000
April
120,000
140,000
90,000
120,000
Мay
200,000
140,000
100,000
150,000
Based on the data obtained from each project, you have found out the value of
work done on the 31st of March, which is shown in Table 2 below.
Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the
31st of March
Project
Actual Value of Work
Done
300,000
250,000
250,000
280,000
Direct Cost Incurred
A
220,000
180,000
200,000
240,000
Each project is supposed to contribute 10%
profit and 8% orerhead to the compoany.
You are requested to present to the
company the turnorer as of the 31st of
march. Prepare your answenr by answering
the following que'stions.
a) Calculate the planned ralue of work
done, the total planned orerhead and the
total profit contribution from all the.
projects as of the 31st of March.
b)…
arrow_forward
A project has been defined that consist of 13 activities for which the estimated cost and duration
have been defined (TABLE).
Afterfour-andahalf monthfthe activates A, B, D. E, G are completed and Fis one half complete
nd (H) is three -fourth complete and (C) is half complete The incurred cost to date is 1720009
Apply your knowledge of camed value to calculate the status of this project in terms of the
schedule and the budger?
Activity
中
Cost
100000
25600
500000
4S000
150000
29000
180000
84000
840000
700000
470000
Jan
Feb
Mar
May
Jun
H.
45000
arrow_forward
Apps ( MyWay
: 01 - Introduction
A this second one
What percentage of the entire development effort should be devoted tO
the PIP process? *
O Less than 10%
O Less than 5%
O Between 20 and 30%
O Between 10 and 20%
Defining the necessary activities required to organize the initiation team m
while they are working to define the scope of the project is the focus of
which of the following activities?
O Establishing the project initiation plan
O Establishing management procedures
O Establishing the project management environment and project workbook
O Establishing the relationship with the customer
A controlled process of initiating, planning, executing, and closing down a
project best defines:
O Project development
O Systems management
O Systems development
O Project management
arrow_forward
Table 1: The Planned Value of Work Done Schedule
Jan
Feb
March
Project A
Project B
Project C
Project D
60,000
100,000
80,000
120,000
100,000
80,000
80,000
120,000
120,000
120,000
70,000
April
120,000
140,000
90,000
120,000
May
200,000
140,000
100,000
150,000
100,000
Based on the data obtained from each project, you have found out the value of
work done on the 31st of March, which is shown in Table 2 below.
Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the
31st of March
Actual Value of Work
Done
300,000
250,000
250,000
280,000
Project
Direct Cost Incurred
220,000
180,000
200,000
240,000
A
Each project is supposed to contribute 10%
profit and 8% overhead to the company.
You are requested to present to the
company the turnorer as of the 31st of
march. Prepare your answenr by answering
the following que'stions.
la) Calculate the planned ralue of work
done, the total planned orerhead and the
total profit contribution from all the.
projects as of the 31st of March.
b)…
arrow_forward
Question Help
Use the NPV method to determine whether Smith Products should invest in the following projects:
Project A: Costs $270,000 and offers eight annual net cash inflows of $57,000. Smith Products requires an annual return of 14% on investments of this nature.
Project B: Costs $390,000 and offers 10 annual net cash inflows of $74,000. Smith Products demands an annual return of 12% on investments of this nature.
(Click the icon to view Present Value of $1 table.)
(Click the icon to view Present Value of Ordinary Annuity of $1 table.)
Read the requirements.
Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net
present value.)
Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A.
Project A:
Net Cash
Annuity PV Factor
Present
Years
Inflow
(i=14%, n=8)
Value
1 - 8…
arrow_forward
Table 1: The Planned Value of Work Done Schedule
March
120,000
120,000
70,000
100,000
Jan
Feb
Project A
Project B
Project C
Project D
60,000
100,000
80,000
120,000
100,000
80,000
80,000
120,000
Аpril
120,000
140,000
90,000
120,000
May
200,000
140,000
100,000
150,000
Based on the data obtained from each project, you have found out the value of
work done on the 31st of March, which is shown in Table 2 below.
Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the
31st of March
Project
Actual Value of Work
Done
300,000
250,000
250,000
280,000
Direct Cost Incurred
220,000
180,000
200,000
240,000
A
Each project is supposed to contribute 10%
profit and 8% orerhead to the compoany.
You are requested to present to the
company the turnorer as of the 31st of
march. Prepare your answer by answering
the following questions.
a) Calculate the planned ralue of work
done, the total planned orerhead and the
total profit contribution from all the
projects as of the 31st of march.
b)…
arrow_forward
Table 1: The Planned Value of Work Done Schedule
March
120,000
120,000
70,000
100,000
Jan
Feb
Project A
Project B
Project C
Project D
60,000
100,000
80,000
120,000
100,000
80,000
80,000
120,000
Аpril
120,000
140,000
90,000
120,000
May
200,000
140,000
100,000
150,000
Based on the data obtained from each project, you have found out the value of
work done on the 31st of March, which is shown in Table 2 below.
Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the
31st of March
Project
Direct Cost Incurred
Actual Value of Work
Done
300,000
250,000
250,000
280,000
A
220,000
180,000
200,000
240,000
Each project is supposed to contribute 10%
profit and 8% overhead to the compoany.
You are requested to present to the
company the turnorer as of the 31st of
march. Prepare your answer by answering
the following questions.
a) Calculate the planned ralue of work
done, the total planned orerhead and the
total profit contribution from all the
projects as of the 31st of march.
b)…
arrow_forward
Question #1a) What is a âtransfer price?âb) List and describe 3 main reasons for using transfer prices.Question #2Consider the following information about a potential project:Investment requiredExpected annual project revenueExpected annual project expensesRequired rate of returnCurrent division return on investment$3,000,000$6,000,000$5,550,00011%18%a) Calculate the projectâs return on investment.b) Based solely on ROI, is this project in the firmâs best interests? Why or why not?c) Is this project in the division managerâs best interests? Why or why not?d) Perform DuPont Analysis on this project.e) What is the projectâs residual income?Question #3List and describe five traits that can differentiate a customer that is relatively inexpensive to service from a customer that is relatively expensive to service.Question #4List and describe five actions a firm can take if a customer appears…
arrow_forward
Question1:
1. Determine the Payback Period and write a conclusion for the two projects E and R based on the information provided in the table below:
Year
Cash Flow (E)
Cash Flow (R)
0
-3700
-2900
1
400
500
2
500
600
3
700
700
4
800
900
5
1000
1100
6
1200
1300
Question2:
1. Discuss the critical importance of work schedule in project management.2. Discuss the contribution of cost estimation in the completion of successful project.3. A firm is planning a project which consists of the following ten jobs and precedence relations are identified with their node numbers:
Jobs (i-j)
1-2
1-3
2-3
2-4
2-5
3-5
4-7
5-6
6-7
7-8
Durations (days)
9
5
12
7
8
11
10
3
4
6
a. Draw an arrow diagram representing the project.b. Determine the critical pathc. What is the duration of the project?
Question3:
A company is planning to purchase a new machine to expand the range of its products.…
arrow_forward
ne
NPV, with rankings Botany Bay, Inc., a maker of casual clothing, is considering four projects shown in the following table,
Because of past financial difficulties,
ptions the company has a high cost of capital at 14.4%.
a. Calculate the NPV of each project, using a cost of capital of 14.4%.
b. Rank acceptable projects by NPV.
c. Calculate the IRR of each project and use it to determine the highest cost of capital at which all of the projects would be acceptable.
a. Calculate the NPV of each project, using a cost of capital of 14.4%.
The NPV of project A is $
(Round to the nearest cent.)
Is project A acceptable? (Select the best answer below.)
O A. No
O B. Yes
The NPV of project B is $
(Round to the nearest cent.)
la nreinnt Danontabl-2/0lest the hant an nr hale
Click to select your answer(s).
P Type here to search
arrow_forward
ata table
K
Fabulous Fabricators needs to decide how to allocate space in its prod
year. It is considering the following contracts: E
a. What are the profitability indexes of the projed Data Table
b. What should Fabulous Fabricators do?
a. What are the profitability indexes of the projects?
The profitability index for contract A is
***
Contract
A
B
C
ck on the following icon in order to copy its contents into a spreadsheet.)
Use of Facility
100%
60%
40%
NPV
$1.98 million
$1.02 million
$1.53 million
(Round to two decimal places
arrow_forward
Table 1: Project Data
Project
NPV (M$)
Risk (%)
Capital (M$)
A
19
4
14
B
22
S
10
C
24
6
12
D
27
7
15
E
21
5
13
The budget constraint may be stated as:
*A+c+2%p <= 0
14% +10x12x15xD -13%E43
14% -10%E-12x15xD -13%E43
%B5%E
arrow_forward
Required information
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the
upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV
factors to 4 decimals.)
Project
Year(s)
B
D
$ (25,000)
$(50,000)
16,000
16,000
16,000
16,000
16,000
$ (50,000)
5,000
10,000
15,000
20,000
25,000
Initial investment
$(25,000)
5,000
5,000
5,000
5,000
5,000
5,000
$ 1,081
$(100,000)
30,000
30,000
Amount of net cash return
1
2
3.
10,000
10,000
10,000
6,000
15,000
15,000
15,000
15,000
2,942
4
5
Per year
6-10
NPV (14% discount rate)
2$
$
Present value ratio
1.04
Required:
a. Calculate the net present value of projects
indicated by a minus sign.)
and D, using
as the cost of capital for Scott Inc. (Negative amounts should be
Project
Net Present
Value
B
D
arrow_forward
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data
on each project are as follows.
Capital investment
Annual net income:
Total
Year 1
(a)
2
Project Bono
3
4
Project Edge
5
Project Bono
$160,000
14,000
Project Clayton
14,000
14,000
Click here to view the factor table.
14,000
14,000
$70,000
Project Edge Project Clayton
$175,000
$200,000
18,000
17,000
16,000
12,000
9,000
$72,000
Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash
flows occur evenly throughout the year.)
years
27,000
years
23,000
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
years
21,000
13,000
12,000
$96,000
arrow_forward
arning X
+
tps://ng.cengage.com/static/nb/ui/evo/index.html?deploymentid=5933142288413647560152243&eISBN=97813379
CENGAGE | MINDTAP
11: Assignment - The Basics of Capital Budgeting
Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of
$800,000.
Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using
the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because returns in percentage form are
easier to understand and compare to required returns. Blue Llama Mining Company's WACC is 8%, and project Sigma has the same risk
as the firm's average project.
The project is expected to generate the following net cash flows:
Year
Year 1
Year 2
Year 3
Year 4
Cash Flow
$350,000
$475,000
$425,000
$500,000
Which of the following is the correct calculation of project Sigma's IRR?
34.38%
38.20%
42.02%
O 36.29%
arrow_forward
Compute for the benefit ratio of the following
projects.
Project cost
Gross income
Operating cost
Life of project
Interest rate
O a. 1.20
O b.
1.70
O c. 1.07
O d. 1.02
5,000,000
2,000,000
1,000,000
20 years
10%
arrow_forward
How many IRRs could be estimated for each project below:
Project A has ________ (1, 2.3. or 4) IRR(s).
Project B has __________ (1,2,3, or 4) IRR(s).
Project C has ____________ (1,2,3, or 4) IRR(s).
Project D has___________ (1,2,3, or 4) IRR(s).
arrow_forward
Project 1: NPV 13,941 IRR: 17.66%
Project 2; NPV 31,261 IRR: 28.45%
The questions is : Is it correct to use the IRR rule for project appraisal in this case? Why or why not?
arrow_forward
Required information
[The following information applies to the questions displayed below.]
The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the
upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV
factors to 4 decimals.)
Project
Year (s)
D
E
$ (25,000)
5,000
5,000
5,000
5,000
5,000
5,000
$ 1,081
$ (25,000)
$ (50,000)
$ (50,000)
5,000
10,000
15,000
20,000
25,000
Initial investment
$(100,000)
30,000
30,000
Amount of net cash return
16,000
16,000
16,000
16,000
16,000
10,000
15,000
10,000
10,000
6,000
15,000
15,000
5
Per year
6-10
15,000
NPV (14% discount rate)
$ 2,942
Present value ratio
1.04
b. Calculate the present value ratio for projects B, C, D, and E. (Round your answers to 2 decimal places.)
Project
Present Value
Ratio
B
D
E
arrow_forward
Use the information for the question(s) below.
Project A
- 10,000
Project B
Time 0
- 10,000
Time 1
5,000
4,000
Time 2
4,000
3,000
Time 3
3,000
10,000
If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?
OA. Project A
OB. Project B
OC. Project A and Project B have the same ranking
OD. Cannot calculate a payback period without a discount rate.
arrow_forward
The following information is available on two mutually exclusive projects.
Project Year 0 Year 1 Year 2 Year 3 Year 4
A -$700 $200 $300 $400 $500
B -$700 $600 $300 $200 $100
If the required rate of return is 10%, which project should be selected using the internal rate of return (IRR) method?
Group of answer choices
A
B
arrow_forward
Earned Value Analysis of the project supported by cost Performance Index and Schedule Performance Index readings. Comment on the progress of each activity and overall health of the project. Activity 1- Percentage Completion 80% BCWS Rs. 30,000 ACWP Rs. 25,000. Activity 2- Percentage Completion 40% BCWS Rs. 60,000 ACWP Rs. 80,000. Activity 3- Percentage Completion 100% BCWS Rs. 80,000 ACWP Rs. 78,000. Cumulative BCWS Rs. 170,000 ACWP Rs. 183,000.
arrow_forward
EXERCISE 3: CASH INFLOWS AND CASH OUTFLOWS
With the following capital budgetng elements, identify the cash outflows and cash
inflows that you would use to judge the attractiveness of a project by using the time-
value-of money yardstıcks capital assets ($1.5 million), working capital in year 1
($500,000) and year 2 ($200,000), salaries ($140,000), working capital loan ($190,000).
residual value at the end of the 11th year ($1 million), profit for the years 1 to 10
($300,000), mortgage ($1.1 million), non-cash expense ($50,000), revenue ($300,000),
and sunk costs ($100,000). The project's lifespan is 10 years and the cost of capital is
8%.
arrow_forward
2. NET firm is trying to decide between five mutually exclusive one-
year projects.
Project 1
Project 2
Project 3
Project 4
Project 5
Return Probability of return occurring
16
20
-16
36
48
-8
16
24
-40
0
100
1.0
1.0
0.25
0.50
0.25
0.25
0.50
0.25
0.10
0.60
0.30
Remember to regularly save your work
Sheet 8 of 10
Module Code: ACF15084
Please work out the likely outcome for each project and discuss
whether you can make informed decision according to this.
arrow_forward
You are evaluating the following two mutually exclusive projects:
Project Year 0 Year 1 Year 2 A -$100 $95 $140 B -$50 $50 $120
Both have 15% cost of capital. Using NPV profiles for Projects A and B, determine which project would be chosen under each of IRR rule and NPV rule. (Hint: Draw the NPV profiles.)
Group of answer choices
A under IRR rule, and B under NPV rule
B under IRR rule, and A under NPV rule
A under both IRR and NPV rules
Cannot be determined.
B under both IRR and NPV rules
arrow_forward
Which of the following statement is
true? *
IRR and discount rate all have the
same meaning....
If BCR is less than zero, an investment
to a conservation project is
worthwhile....
Both of them are true
arrow_forward
Part 3: Capital Budgeting and Project EvaluationCase Study: Assume that the company, where you are working as a team in Financial Department,is considering a potential project with a new product. It will require the company to buy a newequipment that will generate the same revenue for the company each year. The table below showsthe initial and annual costs for each option.3.1. Capital Budgeting Decision Making: Perform capital budgeting technique based on EquivalentAnnual Cost (EAC) to advise the Company Management which option should be chosen if therelevant discount rate is 9%?Costs Option A Option BInitial Investment 1,400,000 1,500,000Year 1 35,000 25,000Year 2 35,000 25,000Year 3 35,000 25,000Year 4 35,000 25,000Year 5 25,000
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Related Questions
- Table 1: The Planned Value of Work Done Schedule Jan Feb March Project A Project B Project C Project D 60,000 100,000 80,000 120,000 100,000 80,000 80,000 120,000 120,000 120,000 70,000 100,000 April 120,000 140,000 90,000 120,000 Мay 200,000 140,000 100,000 150,000 Based on the data obtained from each project, you have found out the value of work done on the 31st of March, which is shown in Table 2 below. Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the 31st of March Project Actual Value of Work Done 300,000 250,000 250,000 280,000 Direct Cost Incurred A 220,000 180,000 200,000 240,000 Each project is supposed to contribute 10% profit and 8% orerhead to the compoany. You are requested to present to the company the turnorer as of the 31st of march. Prepare your answenr by answering the following que'stions. a) Calculate the planned ralue of work done, the total planned orerhead and the total profit contribution from all the. projects as of the 31st of March. b)…arrow_forwardA project has been defined that consist of 13 activities for which the estimated cost and duration have been defined (TABLE). Afterfour-andahalf monthfthe activates A, B, D. E, G are completed and Fis one half complete nd (H) is three -fourth complete and (C) is half complete The incurred cost to date is 1720009 Apply your knowledge of camed value to calculate the status of this project in terms of the schedule and the budger? Activity 中 Cost 100000 25600 500000 4S000 150000 29000 180000 84000 840000 700000 470000 Jan Feb Mar May Jun H. 45000arrow_forwardApps ( MyWay : 01 - Introduction A this second one What percentage of the entire development effort should be devoted tO the PIP process? * O Less than 10% O Less than 5% O Between 20 and 30% O Between 10 and 20% Defining the necessary activities required to organize the initiation team m while they are working to define the scope of the project is the focus of which of the following activities? O Establishing the project initiation plan O Establishing management procedures O Establishing the project management environment and project workbook O Establishing the relationship with the customer A controlled process of initiating, planning, executing, and closing down a project best defines: O Project development O Systems management O Systems development O Project managementarrow_forward
- Table 1: The Planned Value of Work Done Schedule Jan Feb March Project A Project B Project C Project D 60,000 100,000 80,000 120,000 100,000 80,000 80,000 120,000 120,000 120,000 70,000 April 120,000 140,000 90,000 120,000 May 200,000 140,000 100,000 150,000 100,000 Based on the data obtained from each project, you have found out the value of work done on the 31st of March, which is shown in Table 2 below. Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the 31st of March Actual Value of Work Done 300,000 250,000 250,000 280,000 Project Direct Cost Incurred 220,000 180,000 200,000 240,000 A Each project is supposed to contribute 10% profit and 8% overhead to the company. You are requested to present to the company the turnorer as of the 31st of march. Prepare your answenr by answering the following que'stions. la) Calculate the planned ralue of work done, the total planned orerhead and the total profit contribution from all the. projects as of the 31st of March. b)…arrow_forwardQuestion Help Use the NPV method to determine whether Smith Products should invest in the following projects: Project A: Costs $270,000 and offers eight annual net cash inflows of $57,000. Smith Products requires an annual return of 14% on investments of this nature. Project B: Costs $390,000 and offers 10 annual net cash inflows of $74,000. Smith Products demands an annual return of 12% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Net Cash Annuity PV Factor Present Years Inflow (i=14%, n=8) Value 1 - 8…arrow_forwardTable 1: The Planned Value of Work Done Schedule March 120,000 120,000 70,000 100,000 Jan Feb Project A Project B Project C Project D 60,000 100,000 80,000 120,000 100,000 80,000 80,000 120,000 Аpril 120,000 140,000 90,000 120,000 May 200,000 140,000 100,000 150,000 Based on the data obtained from each project, you have found out the value of work done on the 31st of March, which is shown in Table 2 below. Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the 31st of March Project Actual Value of Work Done 300,000 250,000 250,000 280,000 Direct Cost Incurred 220,000 180,000 200,000 240,000 A Each project is supposed to contribute 10% profit and 8% orerhead to the compoany. You are requested to present to the company the turnorer as of the 31st of march. Prepare your answer by answering the following questions. a) Calculate the planned ralue of work done, the total planned orerhead and the total profit contribution from all the projects as of the 31st of march. b)…arrow_forward
- Table 1: The Planned Value of Work Done Schedule March 120,000 120,000 70,000 100,000 Jan Feb Project A Project B Project C Project D 60,000 100,000 80,000 120,000 100,000 80,000 80,000 120,000 Аpril 120,000 140,000 90,000 120,000 May 200,000 140,000 100,000 150,000 Based on the data obtained from each project, you have found out the value of work done on the 31st of March, which is shown in Table 2 below. Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the 31st of March Project Direct Cost Incurred Actual Value of Work Done 300,000 250,000 250,000 280,000 A 220,000 180,000 200,000 240,000 Each project is supposed to contribute 10% profit and 8% overhead to the compoany. You are requested to present to the company the turnorer as of the 31st of march. Prepare your answer by answering the following questions. a) Calculate the planned ralue of work done, the total planned orerhead and the total profit contribution from all the projects as of the 31st of march. b)…arrow_forwardQuestion #1a) What is a âtransfer price?âb) List and describe 3 main reasons for using transfer prices.Question #2Consider the following information about a potential project:Investment requiredExpected annual project revenueExpected annual project expensesRequired rate of returnCurrent division return on investment$3,000,000$6,000,000$5,550,00011%18%a) Calculate the projectâs return on investment.b) Based solely on ROI, is this project in the firmâs best interests? Why or why not?c) Is this project in the division managerâs best interests? Why or why not?d) Perform DuPont Analysis on this project.e) What is the projectâs residual income?Question #3List and describe five traits that can differentiate a customer that is relatively inexpensive to service from a customer that is relatively expensive to service.Question #4List and describe five actions a firm can take if a customer appears…arrow_forwardQuestion1: 1. Determine the Payback Period and write a conclusion for the two projects E and R based on the information provided in the table below: Year Cash Flow (E) Cash Flow (R) 0 -3700 -2900 1 400 500 2 500 600 3 700 700 4 800 900 5 1000 1100 6 1200 1300 Question2: 1. Discuss the critical importance of work schedule in project management.2. Discuss the contribution of cost estimation in the completion of successful project.3. A firm is planning a project which consists of the following ten jobs and precedence relations are identified with their node numbers: Jobs (i-j) 1-2 1-3 2-3 2-4 2-5 3-5 4-7 5-6 6-7 7-8 Durations (days) 9 5 12 7 8 11 10 3 4 6 a. Draw an arrow diagram representing the project.b. Determine the critical pathc. What is the duration of the project? Question3: A company is planning to purchase a new machine to expand the range of its products.…arrow_forward
- ne NPV, with rankings Botany Bay, Inc., a maker of casual clothing, is considering four projects shown in the following table, Because of past financial difficulties, ptions the company has a high cost of capital at 14.4%. a. Calculate the NPV of each project, using a cost of capital of 14.4%. b. Rank acceptable projects by NPV. c. Calculate the IRR of each project and use it to determine the highest cost of capital at which all of the projects would be acceptable. a. Calculate the NPV of each project, using a cost of capital of 14.4%. The NPV of project A is $ (Round to the nearest cent.) Is project A acceptable? (Select the best answer below.) O A. No O B. Yes The NPV of project B is $ (Round to the nearest cent.) la nreinnt Danontabl-2/0lest the hant an nr hale Click to select your answer(s). P Type here to searcharrow_forwardata table K Fabulous Fabricators needs to decide how to allocate space in its prod year. It is considering the following contracts: E a. What are the profitability indexes of the projed Data Table b. What should Fabulous Fabricators do? a. What are the profitability indexes of the projects? The profitability index for contract A is *** Contract A B C ck on the following icon in order to copy its contents into a spreadsheet.) Use of Facility 100% 60% 40% NPV $1.98 million $1.02 million $1.53 million (Round to two decimal placesarrow_forwardTable 1: Project Data Project NPV (M$) Risk (%) Capital (M$) A 19 4 14 B 22 S 10 C 24 6 12 D 27 7 15 E 21 5 13 The budget constraint may be stated as: *A+c+2%p <= 0 14% +10x12x15xD -13%E43 14% -10%E-12x15xD -13%E43 %B5%Earrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education