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# Capital Budgeting

### Relationship between net present value and internal rate of return. How are projects with unequal project lives analyzed and compared?

I am looking for some more detailed information with regard to the relationship between net present value (NPV) and internal rate of return (IRR) (Note: the key factor here is the discount rate used). Furthermore, I was hoping someone might be able to explain how they might analyze projects differently if they had unequal projec

### Definition and formulas for NPV, IRR, Payback Period

How do I compute NPV, IRR and Payback period when comparing two organizations for acquisition?

### Compute and Analyze Critical Data Using Microsoft Excel Spreadsheet

I am thinking about aquiring another corperation. I have two choices; the cost of each is \$250,000. I can not spend more than that, so acquiring both corperations is not an option. The following is my critical data I have put togther for each: Corperation A: Revenues= 100K in year one, increasing by 10% each year Expen

### Finance: IRR, WACC, NPV, which project to accept

Project A has an internal rate of return of 15 percent. Project B has an IRR of 14 percent. Both projects have a cost of capital of 12 percent. Which of the following statements is most correct? a. Both projects have a positive net present value. b. Project A must have a higher NPV than Project B. c. If the cost of capit

### Key Financial Metrics (payback period, net present value, internal rate of return and modified rate of return)

Calculate for a company's CFO, key financial metrics for this capital budgeting project. These key metrics must include payback period, net present value, internal rate of return and modified rate of return for a proposed capital budgeting project. Describe what each of these metrics tells us. Key Financial Data for BCD Com

### Capital budgeting

Why is Capital Budgeting an important technique for companies wishing to assess an investment in projects? Which technique would you recommend to management?

### Nonfinancial issues that might override the results of a Discounted Cash Flows Analysis

1. Capital budgeting decisions are not always determined by the numbers. What nonfinancial issues might override the results of a discounted cash flows analysis (and cause a project to be accepted even though its return is below the company's normal required return)?

### Real Time Inc: Net investment required; new project's NPV

The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer system. The computer systems price is \$40,000, and it falls into the MACRS 3-year class. Purchase of the computer system would require an increase in net operating working capital of \$2,000. The new system would increase the firm

### Capital Budgeting

1. The capital budgeting department is contemplating whether to purchase a piece of equipment. The new piece of equipment costs \$900,000. The equipment currently being used b the firm would be replaced by the new and would e sold for \$100,000 which is the firms book value fort he asset. The estimated useful life of the new equip

### Net investment, net cash flows, net present value and the Internal Rate of Return

1. The capital budgeting department is contemplating whether to purchase a piece of equipment. The new piece of equipment costs \$900,000. The equipment currently being used by the firm would be replaced by the new and would be sold for \$100,000 which is the firm's book value for the asset. The estimated useful life of the new eq

### MCQ Managerial Accounting: Blockbuster, Quaker, overhead, budgeted, residual income

Please review all of the problems and make sure they can all be answered correctly before taking on this assignment. I will only need to see the math work for problems 2 and 4. 1. Which one of the following is possible if Blockbuster Video cuts its DVD rental rates by 20%? A) Its fixed costs will decrease. B) It profit w

### Capital Budgeting & Investment problems

Question 1 Apex Ltd. is an Australian operated company with mainly American resident shareholders. The company is currently in the process of comparing two mutually exclusive machines for use in a new project with Machine A costing \$30,000, having a useful life of five years and machine B costing \$45,000 and having a useful l

### Finance

I am having touble with this problem. I've figured out my other ones, but my calculations do not seem right with this one. There is an excel sheet attached which is to be used for the problem below. ** See ATTACHED file(s) for complete details ** ABC Manufacturing is thinking of launching a new product. The company expec

### Capital Budgeting, Variances

The Directors of Bejham Ltd. Plan to introduce a new product... (see attachment) Required: (a) Calculate for the new product: i. net present value (NPV) ii. internal rate of return (IRR) iii. accounting rate of return (ARR) (b) Prepare Manufacturing, Trading and Profit and Loss Accounts in as much deatil as possible

### Captial Budgeting and Staged Entry

Summary given in attachments "Page2" and "Page3." Questions given in attachment "Page4" Example: 1. Consider the land acquistions for Stage 1. a) What cosem if any, should be attributed to the catfish project? b) Assuming that the currently owned site is used for this project, how s hould the Gulf Shrimp Processing Divis

### Financial Case Study

For the following assignment, I am tasked to analyze the company, Genworth Fin ancial. I would like some assistance with understanding key elements of the assignment so that I can successfully write this lengthy paper. I have provided the website of the company which includes key financial data. http://investor.genworth.

### Relevant Cost of Capital Project's

Unlike the net present value criteria, the internal rate of return approach assumes an interest rate equal to ________ the relevant cost of capital, the project's IRR, the project's opportunity cost, or the market's interest rate please advise answer & why - thanks!

### Capital Budgeting Decision: Terminal Cash Flow

A corporation is evaluating the relevant cash flow for a capital budgeting decision and must estimate cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of \$15,000. The machine has an original purchase price of \$80,000, installation cost of \$20,000, and wi

### Capital Budgeting: This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools. Your company is thinking about acquiring another corporation. You have two choices; the cost of each choice is \$250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:

This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools. Your company is thinking about acquiring another corporation. You have two choices; the cost of each choice is \$250,000. You cannot spend more than that, so acquir

### Evaluation of a environmental capital project

I have 11 capital projects that are all being analyzed except one. I am attempting to explain why this project was not evaluated. I then need to calculate the NPV (discounted at the WACC) and the IRR of the project. Then I need to decide if the project should be undertaken and why or why not. The estimated WACC as of January

### What is budgeting?

Budgeting always includes _________. control, planning of short-term activities, evaluating performance, or preparing pro-forma financial statements I believe - control is the answer - please advise answer & why - thanks!!!

### Present Value

Project A: present value (PV) of cash inflows is \$55,000 and the PV of the cash outflows is \$50,000. Project B: PV of cash inflows is \$24,000 and the PV outflows is \$20,000. All of the following are true except ______. the net present value of Project A is \$5,000, the net present value of Project B is \$4,000, the profita

### ROI

IT and Information Management Case #2 ROI The company ACME Real Estate (ARE) provides real estate services including property sales, leasing, and management; corporate services, facilities, and project management; mortgage banking; investment management and capital markets; appraisal and valuation; and research and consu

### A formula in INTERNAL RATE RETURNS & NPV is given.

NPV and IRR Aproject thatcosts \$3,000 to install will provide annual cash flows of \$800 for each of the next 6 years. Is this project worth pursuing, if the discount rate is 10 percent? How high can the discount rate be before you would reject the project? The answer is below: YEAR CASH FLOW DISCOUNT FACT

### Example of a Company Who Failed By Improper Budgeting

Please help with examples of very large, highly visible, projects of companies that have resulted in massive failures. Examples of real life projects where capital budgeting was improperly done.

### Capital Budgeting questions are posed.

I need your help finding the answers to these questions with the following data: Considering the following Scenario Analysis: RATE OF RETURN Scenerio Probability Stocks Bonds Recession .20 -5% +

### NPV, IRR Shares

1. Shane industries is considering a project which has the following cash flows: Year Cash flow 0 (\$5,000) 1 ? 2 \$2,000 3 \$3,000 4 \$3,000 5

### Land owned by a firm is irrelevant to a capital budgeting decision as it is a sunk cost

In general, the value of land currently owned by a firm is irrelevant to a capital budgeting decision because the cost of the property is a sunk cost? a. True. b. False.

### Option analysis for capital budgeting

Has option analysis become more or less important for capital budgeting analysis in recent years?

### Why is the net present value method the optimal capital budgeting method?

Why is the net present value method the optimal capital budgeting method?