Skip to main content

CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year.

FIN100155VA016-1188-001 • There are three (3) types of textbook based homework items located at the end of each chapter. These include Review Questions (RQ), Exercises (E), and Problems (P). Some homework items have been custom created.
Complete the following homework scenario:
Required:
Compare the results of the three (3) methods by quality of information for decision making. Using what you have learned about the three (3) methods, identify the best project by the criteria of long term increase in value. (You do not need to do further research.) Convey your understanding of the Time Value of Money principles used or not used in the three (3) methods. Review the video titled "NPV, IRR, MIRR for Mac and PC Excel" and previously listed in Week 4) to help you understand the foundational concepts:
Scenario Information:
Assume that two gas stations are for sale with the following cash flows: CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year. This is the timeline and data used in calculating the Payback Period, Net Present Value, and Internal Rate of Return. The calculations are done for you. Your task is to select the best project and explain your decision. The methods are presented and the decision each indicates is given below. Investment Sales Price CF1 CF2 Gas Station A $50,000 $0 $100,000 Gas Station B $50,000 $50,000 $25,000
Three (3) Capital Budgeting Methods are presented: 1. 1. Payback Period: Gas Station A is paid back in 2 years: CF1 in year 1, and CF2 in year 2. Gas Station B is paid back in one (1) year. According to the payback period, when given the choice between two mutually exclusive projects, the investment paid back in the shortest time is selected. 2. Net Present Value: Consider the gas station example above under the NPV method, and a discount rate of 10%: o NPV gas station A = $100,000/(1+.10)2 - $50,000 = $32,644 o NPV gas station B = $50,000/(1+.10) + $25,000/(1+.10)2 - $50,000 = $16,115 3. Internal Rate of Return: Assuming 10% is the cost of funds. The IRR for Station A is 41.421%.; for Station B, 36.602. Summary of the Three (3) Methods: o  Gas Station B should be selected, as the investment is returned in 1 period rather than 2 periods required for Gas Station A.  Under the NPV criteria, however, the decision favors gas station A, as it has the higher net present value. NPV is a measure of the value of the investment.  The IRR method favors Gas Station A, as it has a higher return, exceeding the cost of funds (10%) by the
    •  GET THIS PAPER COMPLETED FOR YOU FROM THE WRITING EXPERTS  CLICK HERE TO ORDER 100% ORIGINAL PAPERS AT PrimeWritersBay.com

    Comments

    Post a Comment

    Popular posts from this blog

    Identify and discuss a key milestone in the history of computers that interests you and why.

      Part 1Title: Lab ResponseDiscuss one feature of MS Word and one feature of MS Excel that you found challenging within the lab and why. Examples are WordArt, inserting shapes, adding borders, cell styles, etc. This response should be at least one paragraph in length. Part 2Title: History of Computers Identify and discuss a key milestone in the history of computers that interests you and why. This section should be at least one paragraph. Part 3Title: System Software vs. Application Software In your words, explain the difference between application software and system software as if to another coworker who has limited technical knowledge. Use examples to support your rationalization. This section should be at least two paragraphs. Part 4Title: Blockchain and Cryptocurrency In a minimum of one paragraph each: 1. Conduct some research on the internet and discuss one underlying technology of cryptocurrencies like blockchain, cryptography, distributed ledger technol...
    Post a Comment
    Read more

    Cybersecurity and Infrastructure Security (CISA)

     Develop a research paper that identifies a specific Department of Homeland Security (DHS) operating agency. Fully describe 1 DHS operating agency from the following list: Cybersecurity and Infrastructure Security (CISA) U.S. Customs and Border Protection (CBP) U.S. Citizenship and Immigration Services (USCIS) Federal Emergency Management Agency (FEMA) U.S. Coast Guard (USCG) U.S. Immigration and Customs Enforcement (ICE) U.S. Secret Service (USSS) Transportation Security Administration (TSA) The information must include a discussion of the selected DHS agency. Identify the agency’s mission, goals, objectives, and metrics. Conduct an analysis of how these mission areas address the threats or challenges. Recommend agency program priorities among the current set of goals, objectives, metrics, or budget items. Justification of all choices is an essential element of this assignment. Reference all source material and citations using APA format. WE OFF...
    Post a Comment
    Read more

    Discuss how the project

    ord count : no idea 1. You are required to write a report on all project activities involved in all the 10 knowledge areas of project management for the entire project life cycle. You should also include a list of the respective PM documents, for example PM Plan, PM Quality Management Plan, Risk management, Procurement, etc. The report must include the activities that are considered before the project is closed out. 2. Discuss how the project quality management plan can provide adequate standards and controls in managing global teams in projects. Your discussion must provide adequate arguments for the need of cultural awareness and legal issues. Regards, The post Discuss how the project appeared first on My Assignment Tutor . Assignment status :  Resolved by our Writing Team Source@ PrimeWritersBay.com GET THIS PAPER COMPLETED FOR YOU FROM THE WRITING EXPERTS   CLICK HERE TO ORDER 100% ORIGINAL PAPERS AT PrimeWritersBay.com NO PLAGIARISM
    Post a Comment
    Read more