Homework Answers
In my view, IRR is the best method to evaluate investment proposal. I have listed down two other method to evaluate investment. In my opinion IRR is best method so, I will recommend project with highest IRR i.e project C with IRR of 14.99%.
| Alter native | Option A | Option B | Option C | Option D |
| Capital Investment | 12,000 | 14,400 | 16,250 | 20,000 |
| Net Annual Income | 2,500 | 3,050 | 3,620 | 4,400 |
| IRR | 12.99% | 13.48% | 14.99% | 14.61% |
| Payback period | 4.8 Y | 4.72 Y | 4.49 Y | 4.55 Y |
| NPV | 8000 | 12000 | 12710 |
1520 |
Considering all alternative, there are various methods of capital budgeting but IRR is best method as it take care discounting of future cash flows.
Add Answer to:
You have been presented with 4 investment opportunities. You will receive an income on each investment...
You have been presented with 4 investment opportunities. You will receive an income on each investment...
You have been presented with 4 investment opportunities. You will receive an income on each investment for the next 8 years. MARR is 12% for your personal investments. Using an incremental analysis, which alternative should be chosen? The table below includes initial investment, net annual income, and IRR ch alternative. I would recomment to use incremental PW. however you can use your preferred method. A Capital investment $12,000 B $14,400 Alternative C D $16,250 $20,000 Net annual income $2,500 $3,050...
You have been presented with 4 investment opportunities. You will receive an income on each investment...
You have been presented with 4 investment opportunities. You will receive an income on each investment for the next 8 years. MARR is 12% for your personal investments. Using an incremental analysis, which alternative should be chosen? The table below includes initial investment, net annual income, and IRR for each alternative. I would recomment to use incremental PW, however you can use your preferred method. A Capital investment $12,000 B $14,400 Alternative C $16,250 D $20,000 Net annual income $2,500...
in the incremental analysis question, how did we calculate the IRR of these two alternatives (C-A)? can you show it to...
in the incremental analysis question, how did we calculate the
IRR of these two alternatives (C-A)? can you show it to me step by
step?
Solution The next largest investment is in Alternative C, so examine the incremental investment of C over A. In the table below the IRR of C-A is shown. Alternative C- A Capital $12,000 $14,400 $2,400 investment $2,500 $3,050 $550 Net annual ncome 13.48% 15.86% IRR 12.99% 15.86% > MARR, so Alternative C "wins."
Solution The...
how do you find the incremental IRR? You are the President of AMT Enterprises. You have...
how do you find the incremental IRR?
You are the President of AMT Enterprises. You have the opportunity to expand your product line to include a new semi-conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing (DN), two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. A В C Capital investment Annual expenses $60,000 $90,000 $40,000 $30,000 $70,000 35,000 45,000 15,000 30,000 40,000 25,000 16,000 Annual revenues 50,000 52.000 38,000 28,000 Market value at EOY 10 15,000 10,000 10,000 39.0% 10,000 IRR ??? 7.4% 30.8% 9.2% After the base alternative has been identified, the first comparison to be made in an incremental analysis should be which of...
engineering economy QUESTION 2 The following mutually exclusive investment alternatives have been presented to you A...
engineering economy
QUESTION 2 The following mutually exclusive investment alternatives have been presented to you A B C E Capital investment $60,000 $90,000 $40,000 $30,000 $70,000 Annual expenses $30,000 $40,000 $25,000 $15,000 $35,000 Annual revenues $50,000 $52,000 $38,000 $28,000 $45,000 MV at EOY 10 $15,000 $15,000 $10,000 $10,000 $15,000 IRR 31.5 % 7.4 % 30.8 % 42.5 % 9.2 % The life span of all alternatives is 10 years.. Using a MARR of 15 % per year, what is the...
1.- You have the following three investment opportunities: 2 Capital Investment: Useful Life: Annual sales Variable...
1.- You have the following three investment opportunities: 2 Capital Investment: Useful Life: Annual sales Variable costs (as % of sales) Fixed costs Salvage Value: $ 175,000.00 $ 120,000.00 $ 180,000.00 $ 120,000.00 $ 100,000.00 $ 230,000.00 65% 55% 70% $ 10,400.00 $ 13,000.00 $ 19,500.00 $ 30,000.00 $ 12,000.00 $ 100,000.00 MARR (annual): 6% a) Which investment alternative is the best? (use Cotermination and Imputed Value) which one
6-15. You are the president of AMT Enterprises. You have the opportunity to expand your product...
6-15. You are the president of AMT Enterprises. You have the opportunity to expand your product line to include a new semi- conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing, two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should be chosen? Note: IRR for Alternative...
Consider four alternatives, each of which has an 8-year useful life: A B &n
Consider four alternatives, each of which has an 8-year useful life: A B C D Initial cost $100 $80 $60 $50 Annual benefit $12.20 $12.00 $9.70 $12.20 Salvage Value $75.00 $50.00 $50.00 $0 a) Construct a plot with interest rate on the x axis and PW on the y axis. Plot the PW vs interest rate for all 4 alternatives. Label graphs and make sure the fonts are readable. If your computer chooses very light colors,...
7. (3 pts) You are presented with three investment possibilities, however you only have enough money...
7. (3 pts) You are presented with three investment possibilities, however you only have enough money to invest in one (the opportunities are mutually exclusive). The MARR is 9%. Which one should be chosen? Make a decision based on an incremental rate of return analysis. А в 100K 110K 120K AB 55K 27K SALV 20K 35K 40K Life 6 yrs 6 yrs ROR 12% 11% 8% 45K 3 yrs
You have been presented with 4 investment opportunities. You will receive an income on each investment for the next 8 years. MARR is 12% for your personal investments. Using an incremental analysis, which alternative should be chosen? The table below includes initial investment, net annual income, and IRR ch alternative. I would recomment to use incremental PW. however you can use your preferred method. A Capital investment $12,000 B $14,400 Alternative C D $16,250 $20,000 Net annual income $2,500 $3,050...
You have been presented with 4 investment opportunities. You will receive an income on each investment for the next 8 years. MARR is 12% for your personal investments. Using an incremental analysis, which alternative should be chosen? The table below includes initial investment, net annual income, and IRR for each alternative. I would recomment to use incremental PW, however you can use your preferred method. A Capital investment $12,000 B $14,400 Alternative C $16,250 D $20,000 Net annual income $2,500...
in the incremental analysis question, how did we calculate the
IRR of these two alternatives (C-A)? can you show it to me step by
step?
Solution The next largest investment is in Alternative C, so examine the incremental investment of C over A. In the table below the IRR of C-A is shown. Alternative C- A Capital $12,000 $14,400 $2,400 investment $2,500 $3,050 $550 Net annual ncome 13.48% 15.86% IRR 12.99% 15.86% > MARR, so Alternative C "wins."
Solution The...
how do you find the incremental IRR?
You are the President of AMT Enterprises. You have the opportunity to expand your product line to include a new semi-conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing (DN), two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. A В C Capital investment Annual expenses $60,000 $90,000 $40,000 $30,000 $70,000 35,000 45,000 15,000 30,000 40,000 25,000 16,000 Annual revenues 50,000 52.000 38,000 28,000 Market value at EOY 10 15,000 10,000 10,000 39.0% 10,000 IRR ??? 7.4% 30.8% 9.2% After the base alternative has been identified, the first comparison to be made in an incremental analysis should be which of...
engineering economy
QUESTION 2 The following mutually exclusive investment alternatives have been presented to you A B C E Capital investment $60,000 $90,000 $40,000 $30,000 $70,000 Annual expenses $30,000 $40,000 $25,000 $15,000 $35,000 Annual revenues $50,000 $52,000 $38,000 $28,000 $45,000 MV at EOY 10 $15,000 $15,000 $10,000 $10,000 $15,000 IRR 31.5 % 7.4 % 30.8 % 42.5 % 9.2 % The life span of all alternatives is 10 years.. Using a MARR of 15 % per year, what is the...
1.- You have the following three investment opportunities: 2 Capital Investment: Useful Life: Annual sales Variable costs (as % of sales) Fixed costs Salvage Value: $ 175,000.00 $ 120,000.00 $ 180,000.00 $ 120,000.00 $ 100,000.00 $ 230,000.00 65% 55% 70% $ 10,400.00 $ 13,000.00 $ 19,500.00 $ 30,000.00 $ 12,000.00 $ 100,000.00 MARR (annual): 6% a) Which investment alternative is the best? (use Cotermination and Imputed Value) which one
6-15. You are the president of AMT Enterprises. You have the opportunity to expand your product line to include a new semi- conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing, two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should be chosen? Note: IRR for Alternative...
7. (3 pts) You are presented with three investment possibilities, however you only have enough money to invest in one (the opportunities are mutually exclusive). The MARR is 9%. Which one should be chosen? Make a decision based on an incremental rate of return analysis. А в 100K 110K 120K AB 55K 27K SALV 20K 35K 40K Life 6 yrs 6 yrs ROR 12% 11% 8% 45K 3 yrs
Most questions answered within 3 hours.
-
find the critical value associated with a right sided hypothesis of
the mean using a sample...
asked 1 hour ago -
Which of the following statements is true with respect to a
simple linear regression model?
a....
asked 2 hours ago -
The energy required to remove an electron from a surface of a
solid element is called...
asked 4 hours ago -
How would you train your employees to avoid risks of using
mobile devices?
asked 4 hours ago -
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 5 hours ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 6 hours ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 6 hours ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 8 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 8 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 9 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 10 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 10 hours ago