| 10‚037 | | | | | | | | | 54‚316 | Capital investment | | | | | | | | 48‚000 | Net present value | | | | | | | | $6‚316 | Using financial calculator: CF0=-48‚000; C01=8‚000; F01=7; C02 = 28‚000; F02 = 1; I = 9; CPT NPV = 6‚315.88 (b) In order to meet the cash payback criteria‚ the project would have to have a cash payback period of less than 5.6 years (8 × 70%). It does not meet the criteria. However‚ the net present value is positive‚ suggesting the project should
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18% Before Tax Amount -$200‚000 0 $72‚540 $32‚000 $40‚000 Tax % After tax 10% PV Amount Factor -$200‚000 1.000 0 1.000 0.65 47‚151 3.605 0.35 11‚200 3.605 40‚000 0.567 Part 5 Internal Rate of Return Excel Function method to calculate IRR This function REQUIRES that you have only one cash flow
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consider IRR as independent variable‚ NPV at minimum ROR and Equivalent Annuity as functions (just like Polynomials function in Math) for each 10 projects because project 6 (Effluent – water treatment at four plants) definitely should be done. According to this analysis I found the location of abruptions and ranked projects by higher IRR. - Profitability Index It can be calculated by using of WACC (10.6%) and free cash flows. - Reinvestment Rate Comparisons for projects at WACC and IRR
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INDEX PAGE Page 1.0 Executive Summary 2 2.0 2.1 2.2 2.3 2.4 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Case Study 1 (Simpson and Selph LTD) Introduction Question 1 Question 2 Question 3 Case Study 2 (Fly – by – Night Airlines) Introduction Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 4 4 6 7 8 10 10 11 12 13 15 15 15 4.0 Conclusion and Recommendation 15 5.0 Bibliography 16 6.0 Declaration by Student 17 1.0 EXECUTIVE SUMMARY This assignment
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Notes: FIN 303 Spring 09‚ Part 7 – Capital Budgeting Professor James P. Dow‚ Jr. Part 7. Capital Budgeting What is Capital Budgeting? Nancy Garcia and Digital Solutions Digital Solutions‚ a software development house‚ is considering a number of new projects‚ including a joint venture with another company. Digital Solutions would provide the software expertise to do the development‚ while the other company‚ American Financial Consultants (AFC) would be responsible for the marketing.
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discussing the different posts and figures in the investment plans we have formed a report taking in consideration the different aspects of the two projects. A file in Excel was created to be able to change numbers and do new calculations to find out how NPV
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Diamond Chemicals: Merseyside and Rotterdam Projects [pic] Group 5 Edi Suryanto Gressiadi Muslim M Fahmiansyah Rudianto Nugroho Wibowo Kristianto MAGISTER OF BUSINESS ADMINISTRATION FACULTY OF ECONOMICS AND BUSINESS GADJAH MADA UNIVERSITY 2011 Diamond Chemicals: Merseyside and Rotterdam Projects Diamond Chemicals is a leading producer of polypropylene‚ the polymer used in a variety of products (ranging from medical products to packaging film‚ carpet fibers
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Gopher Place‚ and Remodeling of the Stadium to the Capital Expenditure Committee (CEC). The Barn promised the highest NPV compared to its low investment cost‚ and holds the highest NPV even at the worst-case scenario. The Gopher place also offered a high NPV with a low investment cost with the second highest NPV at worst-case scenario. The Stadium Remodel yielded the highest NPV to Investment ratio while having the highest median income market with the highest percentage of college graduates. These
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PHUKET BEACH HOTEL: VALUING MUTUALLY EXCLUSIVE PROJECTS I. STATEMENT OF THE PROBLEM This is an assessment of the different costs and benefits of two mutually exclusive capital projects involving the use of an underutilized space located on the second floor of the main building of Phuket Beach Hotel (PBH). The first project‚ Planet Karaoke Pub (PKP) offered to sign a four-year lease agreement with (PBH) while the second project‚ Beach Karaoke Pub (BKP)‚ is a pub the PBH itself‚ plans to put
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35000/5000 = 7 years. Formula for net present value NPV is as follows (CALCULATING NET PRESENTVALUE‚ PAYBACK PERIOD‚ AND RETURN ON INVESTMENT): 15 NPV= -35‚000 + ∑ 5‚000 / (1 + 12%) ^ 15 i=1 = $947 The IRR 15 0= -35‚000 + ∑ 5‚000 / (1 + IRR) ^ 15 i=1 = 11.49% From the above calculation it can be projected that the net present value is negative and the IRR is also lover than the cost of capital which is 12%
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