he ZapCon Company is considering investing in three projects. If it fully invests in a project, the realized cash flows (in millions of dollars) will be as listed in the file P04_99.xlsx. For example, project 1 requires a cash outflow of $3 million today and returns $5.5 million 36 months from now. Today, ZapCon has $3 million in cash. At each time point (0,...
QUESTION 1 Star Industries is considering three alternative projects for the company's investment. The cash flows for three independent projects are as follows: Year 1 Project A ($50,000) $10,000 $15,000 $20,000 $25,000 $30,000 Project B ($100,000) $25,000 $25,000 $25,000 $25,000 $25,000 Project C ($450,000) $200,000 $200,000 $200,000 a) If the disco...
Suppose that 34% of the people who inquire about investments at a certain brokerage firm end up investing in stocks, 30% end up investing in bonds, and 35% end up investing in stocks or bonds (or both). What is the probability that a person who inquires about investments at this firm will invest in both stocks and bonds?
Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment Annual Income Life of Project 22A $244,500 $17,490 6 years 23A 274,400 20,770 9 years 24A 282,900 15,700 7 years Annual income is constant over the life of the project. Each project is expected t...
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: –$9,800 $1,900 $3,100...
Buena Vista Industries is considering investing in a new project that will last for three years. The project requires capital expenditures of $75,000 that will be depreciated over three years. In addition, working capital will need to increase by $5,000 in the first year and maintain that level until the end of the project's life, at which point working...
You are considering the following two projects and can only take one. Your cost of capital is 11.4 %. The cash flows for the two projects are as follows ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$102 $27 $31 $39 $49 B −$102 $49 $39 $31 $20 a. What is the IRR of each project? b. What is the NPV...
Create a portfolio that invests 24% of $1 million in company A, 22% in company B, 20% in company C, 18% in company D, and 16% in company E. The 5 stocks are as follows: Microsoft, Apple, Macy’s, Facebook, & Amazon. Please enter the return correlations for the 5 stocks during the 2018 calendar year. Please use daily returns, and make sure to show your w...
What are reasonable cost of capitol for evaluating average risks projects, high risks projects, and low risk projects? cost of capital= real cost of money + expected return + probability of failure where probability of failure is the risk, expressed as a probability that the money will not be repaid. If the probaility of failure is 1 in twelve (eight and...
Projects which typically have low or negative returns include: Regulatory Projects Infrastructure Projects New Acquisitions All of the Above None of the Above
2. Mattice Corporation is considering investing $640,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $24,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $158,000. The salvage value of the assets used in the project would be $34,...
Citco Company is considering investing up to $575,000 in a sustainability-enhancing project. Its managers have narrowed their choices to three potential projects. Project A would redesign the production process to recycle raw materials waste back into the production cycle, saving on direct materials costs and reducing the amount of waste sent to the landfil...
2. Your firm is considering two projects: Project A and Project B with the following cash flows:A YEAR B YEAR-$75 0 -$60 0$15 1 $20 1$33 2 $13 2$44 3 $15 3$55 4 $18 4a. Calculate the NPVs based on WACCs of 5% and 7%b. What are the IRRs based on the WACCs?c. Calculate the payback period and discounted payback periodd. Which projects should the firm accept if...
2. Your firm is considering two projects: Project A and Project B with the following cash flows:A YEAR B YEAR-$75 0 -$60 0$15 1 $20 1$33 2 $13 2$44 3 $15 3$55 4 $18 4a. Calculate the NPVs based on WACCs of 5% and 7%b. What are the IRRs based on the WACCs?c. Calculate the payback...
MIRR A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: = Project X Project Y -$1,000 $110 -$1,000 $1,100 $280 $110 $400 $55 $750 $50 The projects are equally risky, and their WACC is 8%. What is the MIRR of the project that maximizes shareholder value? Round your answer to two decimal places. Do not round your in...
Calculate payback periods. Please show calculations so I can duplicate it in excel. 7 Your division is considering two projects. Its wACC is 10%, and the projects, after-tax cash flows (in millions 8 of dollars) would be as follows: Expected Cash Flows Project A Project B 10 Time (S30) S5 s10 S15 S20 (S30) S20 S10 S8 S6 12 13 14 15 16 17 18 a. Calculate...
The Armstrong Manufacturing Company is considering two projects, however only one project can be chosen. Prepare an incremental analysis using the data provided. Include internal rate of return (IRR) for each alternative. Prepare a report to be presented to vice-president of manufacturing with your recommendation. The company uses a depreciation. The compan...
Jack invests $1000 at a certain annual interest rate, and he invests another $2000 at an annual rate that is one-half percent higher. If he recieves a total of $190 interest in one year, at what rate is the $1000 invested?
Nancy invests $100 in one account for 10 year at a 9% interest rate compounded annually, and she invests $150 in an account for 10 years at a 6% interest rate compounded semi-annually. how much money will she have in the account after 10 years?
Example 2 Projects B1 and B2 are mutually exclusive. Projects CI and C2 are mutually exclusive and dependent on the acceptance of B2. Finally, project D is dependent on the acceptance of Cl. Assuming that MARR-10% per year. Capital availability is limited to $48,000. Formulate the problem as LP model cash flow ($000) for end of year k 4 PW 1 Project 0...