Loading...

Messages

Proposals

Stuck in your homework and missing deadline?

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

The investment detective case 17

31/12/2020 Client: saad24vbs Deadline: 3 days

The investment Detective


Answer Q1:


We can rank the projects by simply inspecting the cash flows (mention bellow), yet it’s not a good measure to rank them.


We can’t rank the projects by only simple inspection of the cash flows because of the time value of money and cost of capital of companies. We use capital budgeting tools to measure financial performance of projects.


The Ranking by simply inspecting the cash flows:


Rank


1st


2nd


3rd


4th


5th


6th


7th


8th


Projects


3


5


8


4


1


7


6


2


Cash Flows


$10,000


$4,200


$4,150


$3,561


$3,310


$2,560


$2,200


$2,165


Answer Q2:


In order to rank these projects, in a purely quantitative manner, we used the following for the 8 projects:


A. Net Present Value (NPV)


B. Internal Rate of Return (IRR)


C. Payback Period (PP)


D. Profitability Index (PI)


A. Net Present Value (NPV)


Year


Project 1


Project 2


Project 3


Project 4


Project 5


Project 6


Project 7


Project 8


0


($2,000)


($2,000)


($2,000)


($2,000)


($2,000)


($2,000)


($2,000)


($2,000)


1


300.00


1,514.55


-


145.45


254.55


2,000.00


1,090.91


(318.18 )


2


272.73


276.03


-


165.29


231.40


-


743.80


(49.59)


3


247.93


123.97


-


262.96


210.37


-


225.39


45.08


4


225.39


-


-


269.79


191.24


-


61.47


239.05


5


204.90


-


-


268.24


173.86


-


43.46


434.64


6


186.28


-


-


248.37


158.05


-


-


677.37


7


169.34


-


-


226.82


143.68


-


-


1,154.61


8


466.51


-


-


207.13


130.62


-


-


-


9


-


-


-


189.15


118.75


-


-


-


10


-


-


-


172.72


107.95


-


-


-


11


-


-


-


157.72


98.14


-


-


-


12


-


-


-


143.70


89.22


-


-


-


13


-


-


-


130.64


81.11


-


-


-


14


-


-


-


119.03


73.73


-


-


-


15


-


-


-


-


67.03


-


-


-


S PV(CF)


2,073.086


1,914.545


2,393.920


2,228.222


2,129.702


2,000


2,165.041


2,182.984


NPV


73.086


(85.455)


393.920


228.222


129.702


0


165.041


182.984


Rank


6th


8th


1st


2nd


5th


7th


4th


3rd


B. Internal Rate of Return (IRR)


Projects


Project 1


Project 2


Project 3


Project 4


Project 5


Project 6


Project 7


Project 8


IRR


10.87%


6.31%


11.33%


12.33%


11.12%


10.00%


15.26%


11.41%


Rank


6th


8th


4th


2nd


5th


7th


1st


3rd


All of these projects are accepted except Project 2 because its cost of capital has higher percentage than the percentage project internal rate of return. Moreover, Project 6 will be a subject of be in different because the cost of capital equal to internal rate of return, which lead to break even project.


COC = 10%


C. Payback Period (PP)


In Payback Period there are two method, non-discounted cash flow and discounted cash flow. Drawback of non-discounted cash flow does not consider TVM and the rate of return, and the discounted cash flow does not examine all the cash flows.


Projects


Project 1


Project 2


Project 3


Project 4


Project 5


Project 6


Project 7


Project 8


Payback Year


7


2


15


6


8


1


2


7


Payback


2,310


2,000


10,000


1,977


2,240


2,200


2,100


4,150


Discounted Payback


1,606.58


1,790.58


2,393.92


1,360.10


1,493.78


2,000


1,834.71


2,182.98


Decision (DPP)


Reject


Reject


Accept


Reject


Reject


Be in different


Reject


Accept


Rank


6th


5th


1st


8th


7th


3rd


4th


2nd


D. Profitability Index (PI)


Projects


Project 1


Project 2


Project 3


Project 4


Project 5


Project 6


Project 7


Project 8


PI


1.037


0.957


1.197


1.092


1.065


1.000


1.083


1.0773


Rank


6th


8th


1st


2nd


5th


7th


3rd


4th


All the projects will be undertaken except for project 8 since it is mutually exclusive with project 7, and project 6 and 2 will not be undertaken since they have IRR that is less than the 10%, the discount rate. Project 1 also might not be taken since “certain officers of the company have recently asserted that the discount rate should be much higher.”


Rank


1st


2nd


Project


8


7


IRR


11.41%


15.26%


NPV


182.98


165.04


Since these two projects are mutually exclusive and have the IRR above 10%, Project 8 will be chosen because it has higher NPV.


Rank


1st


2nd


3rd


4th


5th


6th


7th


8th


Project


3


4


8


7


5


1


6


2


PI


1.197


1.092


1.083


1.0773


1.065


1.037


1.000


0.957


All the projects will be undertaken except for project 7 since it is mutually exclusive with project 8, and project 6 and 2 will not be undertaken since they have PI’s equal to 1 and 0.957, because they are not greater than 1.


Selected Projects as per the quantitative methods as follow:


Rank


1st


2nd


3rd


4th


Projects


Projects 3


Projects 4


Projects 8


Projects 5


• Comparing the quantitative methods, we noticed that project 3 scored 1st four times using simple inspections of cash flows, NPV, PP, and PI. Project 7 however, scored 1st only through using the IRR method. Looking on the last ranked projects, project 2 has scored last 4 times using simple inspections of cash flows, NPV, IRR, and PI.


• Net Present Value is considered the best approach since it:


i. Uses Cash Flows.


ii. Uses all the Cash Flows of the project.


iii. And discounts the Cash Flows properly.


And through using the NPV approach, Project 3 got the highest NPV, 393.92, and then comes 4, 8, 5 and 1.


Answer 3:


Selected Projects as per the quantitative methods as follow:


Rank


1st


2nd


3rd


4th


Projects


Projects 3


Projects 4


Projects 8


Projects 5


The above table showing that it is absolutely the rank will be differ from the ranking obtain by simple inception of the cash flow


Answer 4:


Project 1 Bonds


Project 2 Equipment Depreciation


Project 3 Land or real assets investments


Project 4 Diary factory that incur agricultural costs


Project 5 Car Loan


Project 6 Stock


Project 7 Trucks Depreciation


Project 8 Construction projects


0.10865030333732562 6.3088234267993482E-2 0.11326357684480115 0.12328333077501186 0.11121604343002223 0.10000000000000009 0.15257139008454979 0.1140642023834566


IRR

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Guarantee Your Academic Success!

Hire Professional Writers And Get Best Homework Writing Services In Any Subject

6 writers have sent their proposals to do this homework:

University Coursework Help
Top Essay Tutor
Helping Hand
Smart Accountants
Custom Coursework Service
A Grade Exams
Writer Writer Name Offer Chat
University Coursework Help

ONLINE

University Coursework Help

Hi dear, I am ready to do your homework in a reasonable price.

$102 Chat With Writer
Top Essay Tutor

ONLINE

Top Essay Tutor

I have more than 12 years of experience in managing online classes, exams, and quizzes on different websites like; Connect, McGraw-Hill, and Blackboard. I always provide a guarantee to my clients for their grades.

$105 Chat With Writer
Helping Hand

ONLINE

Helping Hand

I am an Academic writer with 10 years of experience. As an Academic writer, my aim is to generate unique content without Plagiarism as per the client’s requirements.

$100 Chat With Writer
Smart Accountants

ONLINE

Smart Accountants

I feel, I am the best option for you to fulfill this project with 100% perfection. I am working in this industry since 2014 and I have served more than 1200 clients with a full amount of satisfaction.

$95 Chat With Writer
Custom Coursework Service

ONLINE

Custom Coursework Service

Hey, Hope you are doing great :) I have read your project description. I am a high qualified writer. I will surely assist you in writing paper in which i will be explaining and analyzing the formulation and implementation of the strategy of Nestle. I will cover all the points which you have mentioned in your project details. I have a clear idea of what you are looking for. The work will be done according to your expectations. I will provide you Turnitin report as well to check the similarity. I am familiar with APA, MLA, Harvard, Chicago and Turabian referencing styles. I have more than 5 years’ experience in technical and academic writing. Please message me to discuss further details. I will be glad to assist you out.

$95 Chat With Writer
A Grade Exams

ONLINE

A Grade Exams

Hi, I have read the instructions carefully and I clearly understand what is required of the project. I always make sure I proofread and edit papers well to ensure they are free of typos, plagiarism, and grammar mistakes. Hire me for a timely delivery of a quality content.

$95 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Anxiety Assessment Tools - Being perfect anna quindlen pdf - Npv case study with solution - Bright star poem summary - Fat city workshop study guide - Analytical procedures are required as a part of the - Hybridization and geometry chart - Economic Reading and Reflection - Complete the concept map comparing mitosis and meiosis - Common threads recycling program - Dvd rental database postgresql - Descriptive statistics and data visualization - Tax residency self certification computershare - Everspring on off switch - Training assignment 7 - Why chinese mothers are superior the wall street journal - Invictus meaning line by line - Owasp php cheat sheet - Operations management - Commitment a cautionary tale and provide an example - HRM 534 Employee and Labor Relations - Crowbar overvoltage protection module - Lesson Plan - Thomas hardy ale clone - Statistics paper - Forklift licence victoria handbook - Enron stakeholders analysis - Priority nursing diagnosis for renal failure - Name the following binary compound fe2o3 - Jahangir son of sultan suleiman - Open vs closed chain exercises - Learning theory focuses on the thought processes that underlie learning - Resistance of the primary winding - What authoritative literature addresses comprehensive income - Ib economics hl syllabus - Cons of organic farming - Wireshark stuck on finding local interfaces - Wk-6 - Concur expense administrator manual - Excel chapter 4 grader project mountain view realty - EPIDEMIOLOGY slp3 - 1452 dollars in pounds - How to write hypothesis for moderating variable - Learning activity - Panera bread company case study answers - Difference between fluid transport and fluid power system - Should students be allowed to use cell phones in school - To kill a mockingbird chapter 20 questions - Neurological Disorders - Ca institute in karachi - Dual beam aiming laser - Prince william education association - How to draw maximum ride characters - Experiment 5 physical skeleton the axial skeleton - 289 easthill drive robina - As nzs 4836 2011 pdf - Charters towers state high school - Part B Stategic Marketing Plan - Shaping behavior through rewards and consequences - The "managerial levers" concept is useful for the following reasons: - Pedestrian crossing australian standard - Informatics and nursing opportunities and challenges 6th edition pdf free - The psychology of courage modern research on an ancient virtue - Skin cancer investigation answers - Is color blind recessive or dominant - Week4 project - Root word obstetr o means - Independent nursing practice problem - Questions for shaffer's article on southernization answers - Hr roles mind map hrm 300 - M/shield 2 500ml 61354 - Quantitative research on bedside shift report - Dulce et decorum est pro patria mori - Time complexity avl tree - Discussion - Death Penalty in America 2 - Kansas vs michigan state 2018 live stream - Research paper topics for othello - 22 kv transformer price - Mock interview self reflection - Facial expressions in drama - Why is lopeswrite a valuable tool for students - What's driving porsche case study - Frida kahlo self portrait with thorn necklace and hummingbird essay - Isaca risk it framework - Mylabsplus angelina - Pre intermediate writing tasks - Mean Making Forum 3 - Dragon's dogma vandals ring - International interlac 665 sds - Advantage salary packaging contact number - Writing - Sequence diagram for course registration system - Quartz crystal microbalance price - Atomic Cafe Essay - Managed Care Myths - Discussion - The co operative group head office - Jack hartmann days in the month rap - Is oreo a proper noun