The following table gives the available projects for a firm.
A B C D E
Initial Investment 10 13 6 7 2
NPV 3.5 –2 0.5 6 3
The firm has only $20 million to invest. Which project(s) will be accepted?
Accept Project D, Project E and Project A
Total investment = 7+2+10 = 19
Total NPV = 6+3+3.5 = 12.5
Suppose that you are deciding which group of projects to invest in. The firm has $200 million it can invest and has the following investment opportunities available. What is highest total NPV you can afford? Project Cost/NPV A 60/75 B 100/120 C 50/50 D 50/70 E 40/30. This is all the information given.
26,27,28,29,30 26. The following table owing table gives the available protects (in millions) for A B C D E E g 50 20 0 0 0 20 Initial income 100 70 65 10 30 32 10 NPV company can obtenumit of 170 million to invest what is the maximum NPV the If the firm has a limit of 170 million a. $210 b. $275 C. $307 d. $317 e. $347 Please Show Your Calculation Steps Below 27. Exxon Mobile owns...
Your firm has identified three potential investment projects. The projects and their cash flows are shown here: (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Project Cash Flow Today (millions) Cash Flow in One Year (millions) A -$15 $$16 B $4 $3 C $17 −$11 Suppose all cash flows are certain and the risk-free interest rate is 6%. a. What is the NPV of each...
3. (Ch 10] An all-equity firm is considering the projects shown in the table below. The T-bill rate is 2% and the market risk premium is 5.5%. If the firm uses its current (composite) WACC of 7% (which it should NOT do because the WACC ignores risk) to evaluate these projects, which project(s), if any, will be INCORRECTLY rejected, and which projects, if any, will be INCORRECTLY accepted? [HINT: A picture might help you.] Project Beta 0.15 A Expected Return...
6) A firm is evaluating three mutually exclusive capital budgeting projects. The net present value of each project is shown below. Given this information, which project() should the firm accept? Project 1 100,000 NPV, S Project 2 10,000 Project 3 - 100,000 a) accept Projects 1 and 2, and reject Project 3 b) accept Projects 1 and 3, and reject Project 2 c) accept Project 3, and reject Projects 1 and 2 d) accept Project 1, and reject Projects 2...
Your firm has identified three potential investment projects. The projects and their cash flows are shown below: Project Cash Flow Today (millions) Cash Flow in One Year (millions) A -$7 $15 B $7 $4 C $19 -$6 Suppose all cash flows are certain and the risk-free interest rate is 9%. (a) The NPV of Project A is $Answermillion. (Round to two decimal places.) (b) The NPV of Project B is $Answermillion. (Round to two decimal places.) (c) The...
6. Consider the following potential investment. A firm can invest $250,000 today to acquire a patent. The firm estimates that in the next 10 years ownership of the patent will result in returns of the following amounts. Assuming the firm has a cost of capital of 8%, calculate the net present value of the investment. Year 1 $25,000 Year 2 $26,000 Year 3 $27,500 Year 4 $30,000 Year 5 $35,000 Year 6 $32,500 Year 7 $30,000 Year 8 $25,000 Year...
[Business Analytics/Operational Management] (Excel) Capital budgeting: A firm has 6 projects that it would like to undertake over the next 5 years but because of budget limitations not all can be selected. The total budget that the firm has considered to invest in the projects is $12,400,000. The following table displays the expected revenue (NPV) of each project after 5 years and the required yearly capital for each investment. Table 1: Investment Details Capital (in $000) required per year Investment/...
Please Help As part of a year-end strategy meeting, three projects have been identified as potential investments by head office of Hanna Barbara Inc. The information below 2. gives details of each of the three: Project Libre Project Gemini Project Everest Investment Required (ts 0) Scalable, between $35M $25M | $10M and $50M Depends on Level 2.0M $3.0M NPV of Investment 18.0% 1.20 15.0% IRR 1.12 1.06 Profitability Index Project Libre is scalable in that we can invest anywhere between...
1. Which of the following statements is true about independent projects? a.Independent projects are projects that, if accepted, have to accept one small project to assist other independent projects. b.Independent projects are projects that, if accepted or rejected, do not affect the cash flows of other projects. c.Independent projects are projects that, if accepted, have a negative effect on the company's profit. d.Independent projects are projects that, if accepted or rejected, affect the net profit of other projects. 2. An...