You are considering investment in a project with the following outcomes: State Probability Investment Return State 1 State 2 State 3 State 4 20% 35% 15% 30% -10% 5% 10% 12% What is the project's expected return? 3.54% 4.85% 5.73% 6.45% 7.54%
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- Refer to the table below to answer the following question. Project Initial Investment NPV P 200 22 Q 180 26 R 185 38 S 380 10 The project with highest Profitability Index is Project P Project Q Project R Project SRefer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project Srome =16 MENT I You are considering investing in a project with the following possible outcomes: Probability of Investment Returns States Осcurrence Economic Boom 15% 16% Economic Growth 45% 12% Economic Decline 25% 5% Depression 15% -10% Calculate the standard deviation for this investment. Select one: O a. 6.46% O b. 8.21% O C. 10.07% O d. 11.17% O e. 11.63% bp 近
- Which of the following statement is true? * IRR and discount rate all have the same meaning.... If BCR is less than zero, an investment to a conservation project is worthwhile.... Both of them are trueQuestion 3 Given 10% discount rate, what is the profitability index of the investment project described below? 1.00 0.90 0.95 1.03 1.09 Question 4 What is the best method to use when expressing investment profitability as a percentage? Pick from the answers given below. Payback period Discounted payback period NPV AAR IRRQuestion 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment 1 2 Project A Project B 12000 4150 Project C 12000 12000 5225 8250 1200 3100 3800 4600 Assume a discount Rate of 5.45 % 5260 7360 9460 9275 9300 4 Use the information above and help the management in choosing the most desirable Project using Payback period, Discounted payback Net Present value and Profitability Index. Out of the four methods which is considered to be the most desirable. Explain
- A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18Which project should you invest in according to the NPV and IRR? Project A NPV@ 10% WACC = $135 and IRR 22% Project B NPV @ 10% WACC = $17 and IRR 21% Project C NPV @ 10% WACC = $146 and IRR 23% O a Project A O b. Cannot determine Oc. Project C O d. Project B O e. Project A or BYou are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Returns State 1: Economic boom 18% 20% State 2: Economic growth 42% 16% State 3: Economic decline 30% 3% State 4: Depression 10% -25% Calculate the expected rate of return and standard deviation of returns for this investment, respectively. O 7.35%, 12.99% O2.18%, 1.69% O 8.72%, 12.99% O3.50%, 1.69%
- Question 2 Compute the B/C ratio at i-10%, for the following project and justify if you selected it or not, based on economic view point (Banefits) $30 $30 $ 20 $ 20 $5 $5 $8 $8 $10 $10 (Recurring costs) (Investment)Exercise #3: Decision Trees and Expected Monetary Value (EMV) Question 1: Which project you will choose based on EMV estimation? Why? (Show your calculations) Project Chance Gain or Loss Use for calculations Project A 30% Lose 30,000. 40% Gain 55,000. 30% Lose 15,000. Project B 75% Gain 55,000 25% Lose 150,000. Project C 40% Gain 50,000. 60% Lose 20,000. The best project is:Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment Project A Project B 12000 4150 5260 Project C 12000 12000 1200 3100 5225 3 4 Assume a discount Rate of 5.45 % 3800 4600 7360 9460 8250 9275 9300 Use the information above and help the management in choosing the most desirable Project using Payback period
