NPV Archives - Essay Quoll

Rank the projects using the profitability index. Considering the limit on funds available, which projects should be accepted? Using the NPV, which projects should be accepted, considering the limit on funds available?

Posted on December 18, 2022 by Assessments

Grosvenor Industries has designated $1.2 million for capital investment expenditures during the upcoming year. Its cost of capital is 14 percent. Any unused funds will earn the cost of capital rate. The following investment opportunities along with their required investment and estimated net present values have been identified: Project Net Investment NPV Project Net Investment […]

What are the limitations of using NPV for non-corporate investment projects. Why does the World Bank prefer IRR over NPV for its funded projects?

Posted on December 3, 2022 by Assessments

Capital Budgeting For each of the following assignment questions, in approximately 300 words, submit your analytical response. Q.1. From a corporate capital budgeting perspective, there are four major evaluation criteria , as follows: 1) Net Present Value 2) Internal Rate of Return 3) Modified Internal Rate of Return 4) Payback period Discuss the advantages and […]

Now assume that the cost to replicate Project Y in 2 years will increase to $240,000 because of inflationary pressures. How should the analysis be handled now, and which project should be chosen?

Posted on November 12, 2022 by Assessments

Use the following information for problems 1 to 5. Assume that the projects are mutually exclusive. Year Cash Flow (A) Cash Flow (B) 0 ($1,525,600) ($1,425,600) 1 $683,100 $655,900 2 $480,200 $463,900 3 $745,000 $675,000 4 $308,000 $279,000 1. What is the IRR for each of these projects? Using the IRR decision rule, which project […]

Run a sensitivity analysis on savings to NPV, sales growth rate to NPV, and taxes to NPV. S. Write up your results from ql-q4 and explain if you would accept the project and what risks should be further examined.

Posted on October 21, 2022 by Assessments

1. Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated using the MACRS 3-year depreciation schedule. It will be worth 550,000 at the end of the project in 5 years. You will save $50,000 before taxes per year in order processing costs, and you will […]

Assuming that all of the six warehouses stay open, determine the distribution plan and its corresponding cost.

Posted on July 7, 2021 by Ambrose

Levinson Foods is in the process of expanding its distribution system. After some planned acquisitions, the company will have ten regional centers, with monthly volumes (in cartons) as listed below. Six of these sites currently act as warehouses, shipping to other regional centers and these are designated by (W). Center ALBQ. (W) Boise Dallas (W) […]

Explain the meaning of the capital rationing, the reason why it may occur and how an organisation can determine the best way to invest available capital under capital rationing.

Posted on January 18, 2021 by Ambrose

Success Ltd is considering to invest in a project with expected life of four years. The following forecast o future sales revenue and costs was prepared Sales Revenue Variable costs $000 $000 Year 1 1150 700 Year 2 2300 1000 Year 3 6500 2300 Year 4 4500 1630 The forecast for sale revenue is expressed […]

Explain the payback period statistic. What is the acceptance benchmark when using the payback period statistic?

Posted on August 10, 2020 by Ambrose

Respond to the questions and complete the problems. Questions In a Word document, respond to the following. Number your responses 1–4. Explain the net present value (NPV) method for determining a capital budgeting project’s desirability. What is the acceptance benchmark when using NPV? Explain the payback period statistic. What is the acceptance benchmark when using […]