Air Scrubbers Furnace Fuel Change: Initial Investment $ 1.350,000 $ 385.000 Annual Net Cash Flows $ 225.000 315.000 Annual Net Income Project Life Average Book Value Cost of Capital $ 135,000 S 150,000 15 years 15 years $ 675,000 692.500 6% 8%
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- The following information Company: available for a potential investment for Rose Initial investment P80,000 Net annual cash inflow 20,000 Net present value 36,224 Salvage value 10,000 Useful life 10 yrs. The potential investment's profitability index is A. 2.50 B. 2.85 C. 4.00 D. 1.45Data Review View Acrob Page Layout P19 F G D A Using the information provided in the following table, find the value of each asset. Cash Flow End of Amount Asset Year (Php) Appropriate Required Return (%) A 250,000 18 250,000 250,000 15,000 15 0 16 0 0 1,750,000 75,000 12 425,000 100,000 14 150,000 250,000 350,000 200,000 50.000 File dy B C F Home O 1 through 1 2 3 14 5 1 through 5 6 E 1 2 3 4 5 6 Solution and Answer: 123 Insert Shot on OnePlus Powered by Triple Camera Num Ette FormulasThe following are a project's cash flows. What is the projects year - 110155450 cash flows - 9.70% 5. 14.660%. 8.64% 10.78% . =. 16.94% IBR? $450 $40 3 8490
- MACHINE A MACHINE B INITIAL COST R100 000 R110 000 EXPECTED ECONOMIC LIFE 5 YEARS 5 YEARS EXPECTED DISPOSAL/RESIDUAL VALUE R10 000 EXPECTED NET CASH INFLOWS R R END OF: YEAR 1 34 000 33 000 YEAR 2 27 000 33 000 YEAR 3 32 000 33 000 YEAR 4 30 000 33 000 YEAR 5 26 000 33 000 DEPRECIATION PER YEAR 18 000 22 000 COMPANY ESTIMATES COST CAPITAL = 14% 2) Calculate the accounting rate of return (on average investment) for Machine A. (answer rounded offto 2 decimal places).1. For the following cash flow compute: Investment $65,000 42,000 60,000 Annual operating Cost Annual Revenues Operating cost will increase by Arithmetic Gradient of G=$500 annually from the second year thru the 6 year Salvage Value at the end of 6 year Investment life n=6 years MARR= 10% 3,000 Hint for IRR use 20% a. Draw the cash-flow Diagram and compute PVW AW.FW b. IRR C. ERRYear Investment $13,000 $10,000 Cash Inflow $1,000 $2,000 $2,500 $4,000 $5,000 $4,000 $5,000 $4,000 $3,000 $2,000 Determine the Payback Period. 1234567899
- D Open recovered wor x✓ fx 0 A B C D E F OMEGA PROJECT CASH FLOW INFORMATION Year Inflow Outflow = Newflow 0 1 2 3 G -$225,000 -$190,000 $150,000 $190,000 $215,000 $175,000 $197,000 $70,000 $582,000 $225,000 0 $190,000 $150,000 0 $220,000 $30,000 4 $215,000 0 5 $205,000 $30,000 6 $197,000 0 7 $100,000 $30,000 Total $1,087,000 $505,000 Required ROI 18% Project Omega NPV (Year 0) Project Omega Total NPV Which of the two projects would you fund and why? ▶ 3T Company Data + Ready have on project selection? (Reference Section 2.4, pg 38-39) 19 MAY 910 30 H NPV I K L M N O ALPHA PROJECT CASH FLOW INFORMATION Year Inflow Outflow = 0 1 $50,000 2 $150,000 3 $250,000 4 $250,000 5 $200,000 6 $180,000 7 $120,000 Total $ 1,200,000 Required ROI Project Alpha NPV (Year 1). Project Alpha NPV 1 tv $300,000 $100,000 0 $50,000 0 $50,000 0 $30,000 $530,000 18% d P Newflow -$300,005 -$50,000 $150,000 $200,000 $250,000 $150,000 $180,000 $90,000 $670,000 A Q NPVAsset End of year Amount Appropriate Required Return A 1 $5,000 18% 2 $5,000 3 $5,000 Cash Flow Using cell references to the given datea and the PV function, calculate the value of asset A.METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project BETA Investment P123,417 P155,934 Depreciable assets included in the investment figure 60,000 72,000 Economic life 8 years 12 years Annual sales revenue P65,000 P78,000 Annual out-of-pocket operating cost 36,000 42,500 Income tax rate 35% Cost of capital 10% Determine which proposal is the better one based on: a. Internal rate of return b. Net present value c. Profitability index d. Discounted payback period
- A B C D E F G H 1 Create a income statement and show net cashflow each year for the 4 years so you can use it for what-if analysis. 2 3 Base case Inputs: 4 5 6 4-year life of the project $26/unit Sales price of product 7 $13/unit Cost to produce the product 8 $1450/year operating costs 9 1250 units First-year production 16% Increase in production each year 1012345167819202123 24 25 26 14 Answer the following question for "what if analysis" 16 What is the IRR for the Base case? 17 $32,000 Initial investment depreciated with MACRS 3 year recovery 28% tax rate What is the IRR if the volume produced does not increase by 16%/year, but only increased 10%/yr.? What is the IRR if the sales price is only $24/unit? What is the IRR if the tax rate increases to 49%? 20 What is the IRR if the initial investment is $39,000? 18 19 22 Which analysis should your company be most concerned about? I J kCash Flow Asset End of Year Amount Appropriate Required Return B 1 through Infinity $300 15% using cell References to the given data, calculate the value of asset BDiscount Rate 12% Investment Project Cash Flow Total Net Cash Flow Initial Investment $ (8,000) ? Year 1 $ 800 ? Year 2 $ 900 ? Year 3 $ 1,500 ? Year 4 $ 1,800 ? Year 5 $ 3,200 NPV of investment $ ? Estimated Payback Period ? Estimate the total net cash flows, NPV of Investment and Estimated Payback Period using the excel's formula.