Q) Perlis state government decided to invest for a Harumanis mango project at Kuala Perlis, Perlis and expected total revenue of RM12.0 million after 5 years. Calculate the investment cost required if the Minimum Attractive Rate of Return (MARR) value is 12% per year. Illustrate the Cash Flow Diagram (CFD).
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- (b) Nikita Berhad is evaluating a project which expected to earn a series of cash inflows as shown in the table below. The initial investment of this project is RM52,300. Cash Inflow (RM) 12,500 20,750 35,020 36,000 37,500 38,800 Year 2 3 4 5 6 If the required rate of return is 12 percent, determine whether this project is profit or loss by applying the net present value and profitability index techniques.Nashville's Kitchen Corp. is considering a proposed project with the following cash flows. If both the discount rate and the reinvestment rate are 16 percent, what is the project’s modified internal rate of return (MIRR) using the combination approach? Solve using a Financial Calculator showing all calculator inputs. Year Cash Flow 0 –$375,000 1 133,500 2 -35,600 3 244,700 4 271,000Consider an investment project with the cash flows given in the table below. Compute the IRR for this investment. Is the project acceptable at MARR = 10%? The IRR for this project is %. (Round to one decimal place.) n 0 1 2 3 Cash Flow -$35,000 15,000 14,520 13,990
- Dundonald Inc. has identified an investment project with the following cash flows. If the discount rate is 8%, what is the future value of these cash flows in year 4? What is the future value at a discount rate of 11%? At 24%? Year Cash Flow 1 $1,375 2 1,495 3 1,580 4 1,630You have been asked to analyze two investment proposals, A and B. Project A’s cost is RM80,000 and the project’s B cost is RM100,000. Cash flows for both projects are as follows, and the required rate of return is 10%. Year Cash Flows (RM) A Cash Flows (RM) B 1 20,000 25,000 2 25,000 25,000 3 20,000 25,000 4 25,000 25,000 5 30,000 25,000 Based on the above information, calculate for A and B, the: 1. Payback period 2. Net Present Value (NPV) 3. Internal Rate of Return 4. Discounted paybackThe net cash flow per year for the investment projects A and B, is presented in the table below. Expected Net Cash Flow ($) Project 0 1 2 3 4 A -10,000 6500 3000 3000 1000 B -10,000 3500 3500 3500 3500 Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum acceptable rate of return of 8%. Which projects should be accepted if they are independent projects? Would the selection of the projects change if the cost of capital were 12%?
- Kikwetu Limited is considering investing in a project with the following expected cashflows: Year (C.F) 1 35,500 2 39,000 3 25,000 4 15,000 The cost of the project = Sh. 100,000 Required: Compute the approximate profitability index of the project if the discount rate is 10% a. 4.6712 b. 1.9823 c. -1.56 d. 0.9308Kikwetu Limited is considering investing in a project with the following expected cashflows: Year (C.F) 1 35,500 2 39,000 3 25,000 4 15,000 The cost of the project = Sh. 100,000 Compute the approximate profitability index of the projectConsider a project with initial investment of Birr 25,000 generating the following cash flows over 4 years. Year Project cash flow (Birr) 0 (25,000) 1 5,000 2 7,000 3 13,000 4 16,000 ii.1 Based on the above details compute the following: Internal Rate of Investment (IRR) Profitability Index (PI) ii.2 Do you accept this project for investment? Give reason for your answer.
- Consider the cash flows for the following investment projects. Assume that MARR=12%/year. A B C 0 - PhP 1,000 – PhP 1,000 - PhP2,000 1 900 600 900 2 500 500 900 100 500 900 4 50 100 900 Which project should be selected using incremental analysis (AW method)? ANSWERS: AWA = PhP Blank 1 AWB = PhP Blank 2 AWC = PhP Blank 3 AW (B-A) = PhP Blank 4 AW (C-B) = PhP Blank 5 Investment Blank 6 (use capital letter) is better.Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback periodThe cash flows associated with an investment project are as follows: Project Y (200 000) Year 1 100 000 2 100 000 3 120 000 4 110 000 The discount rate is 8 percent. What's the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI of a projects Calculate IRR of a projects Should the firm accept the project? a) b) c) d)