aining 5 OF 5 QUESTIONS REMAINING X Time limit ninas Amat Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment presented in the below table. The economic life of the project A will be 5-year's and Project B will be 6 years, and both projects carry same risk. Batelco tinc uses a discount rate of 12%. After considering the current economic station Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROG 18% A financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table Attempts Respondus LockDown Brower Max points Additional Information Refresh the assessment to view updated betals ater you submit an attempt Cost of equipment Projects A 240,000 Projects B Grading 470,000 Working Capital needed 60,000 80,000 Overhaul of the equipment in two years 12000 14000 Annual revenues and costs: Sales revenues 375,000 300,000 180,000 90,000 Variable expenses Last Subint 5 OF 5 QUESTIONS REMAINING Refresh the assessment to view at an affer you submit an attempt 115 minutes remaining Sales revenues 375,000 300,000 Variable expenses 180,000 90,000 Depreciation expense 48,000 78,333 Fixed out-of-pocket operating 90,000 70,000 costs Life of Project 5 year 6 years The working capital will be released 5th and 6th year of the project A and project B respectively, for investment elsewhere within the company. Required: 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? 12 Marko Present value (table 14B-1) is given below to determine the appropriate discount factoris) using the tables provided. Table 148-1 Present Value of $1 x Submit 114 minutes remaining Ferio 5% 7 1 T 1962 0.952 5943 0.9535 6.336 6917 2 0.925 0.307 0.390 6.875 11 12% 0301 6.343 0.836 8812 3 0.339 0.364 0.540 0816 0754 0.772 2751 4 0.855 0.823 0.792 8712 0735 0.708 0.683 4659 BAM " 0.822 0784 0747 0.713 0.681 0.650 6421 9 A 0.790 0.746 0.705 0.666 0.630 0396 0364 0.335 5 OF 5 QUESTIONS REMAINING 6383 14% 6877 030 T 8552 6572 0567 054 0519 2.457 456 C 0.760 0.711 0.645 0.623 0.543 0547 0513 0482 1453 8425 0400 6306 0731 0.677 0.582 0.627 0.540 0.50 0467 644 044 6376 0351 6327 9 0.703 0.645 0592 0.544 0.500 0460 8424 6391 8.361 0333 430 GJM 10 0.676 0.614 0.558 0.508 0.463 0.422 6352 0322 8315 0.270 347 Subr Previous Next > Last >