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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 limitations of each of the above. If there is one you prefer, state the reasons for your […]
You will type your answers into this document. Save the document with your last name and submit to the dropbox. Note that you will get partial credit if you show your work even if the answers are incorrect. The table below gives the initial investment (the negative numbers at “Year 0”) for two projects. Compute […]
Resources: Corporate Finance Create a 350-word memo to management including the following: Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows. Describe the advantages and disadvantages of each method. Calculate the following time value of money problems: If you want to accumulate […]
Case Questions Management Estimate the incremental cash flows for Sneaker 2013 project. Estimate the project’s payback period, net present value, and internal rate of return. (Use excel template posted) Estimate the incremental cash flows for Persistence project. Estimate the project’s payback period, net present value, and internal rate of return. (Use excel template posted) Which […]
Business The Cosmo K Manufacturing Group currently has sales of $1,400,000 per year. It is considering the addition of a new office machine, which will not result in any new sales but will save the company $105,500 before taxes per year over its 5-year useful life. The machine will cost $300,000 plus another $12,000 for […]
Answer the following: Based on your calculations, should EEC acquire the supplier? Why or why not? Which of the techniques (NPV, IRR, or payback period) is the most useful tool to use? Why? Which of the techniques (NPV, IRR, or payback period) is the least useful tool to use? Why? Would your answer be the […]
1. Ann wants a mortgage to buy a house. Ann gives the following information to the bank: Income: $240k/year or 20k/month Average monthly debt: $2k Estimated monthly Taxes + Insurance: $700 Down-payment: $50k saved -Ann’s down-payment will be $50k, she will take out a mortgage for the remainder Ann qualifies for a 30 year FA-CPM-FRM […]
For this week’s assignment, review the readings and any outside research you have done related to how the evaluation process and selection of capital projects are affected by mutually exclusive projects, project sequencing, and capital rationing. Pay particular attention to Burns and Walker’s 2009 article, “Capital Budgeting Surveys: The Future is Now,” which was assigned […]
1) Construct a pro-forma p&l and cash flow statement for 2021 to 2030 for the company assuming the relocation of Canadian production to Mexico. Comparing the base case (declining sales in Canada due to tariff/costs) vs. the scenario of moving production for Canadian customers to Mexico what are the financial impacts? (note: the answers to […]
1)Lease option a.What are the relevant costs and benefits of leasing the additional space to Diamond Events? b.Are any costs or benefits irrelevant? c.What is the NPV of leasing the additional space to Diamond Events? d.What is the IRR? e.Do the NPV and IRR decision making rules agree? f.Sensitivity analysisi.Construct a cost of capital sensitivity […]
