Can anyone help me with the questions 1-6 on the bottom left corner
Capital Budgeting Decisions CASE STUDY 10 (a 1 (b) 8) Sales for first year (1) 9) Sales 17 3) ($5,000) of sales in Year 1) 21/ 7) Equip. salvage value before tax $15,000 3) Cost of Capital (Discount Rate) CF1 CF2 CF3 (200,000) (5,000) (240,000) Would you accept the project based on Payback rule if project cut-off and have coficts 10 310,266 240,000 33.33% 240,000 14.81% 240,000 7.41% $35,544 $17,784 20,000 CF S (260,000) S (260,000) 9,997 $ (180,003) 94,668$ (85,335) 78,807 $ (6,528) 3.06 112,144 S 105,616 period 3.06 Year CF 000) S (260,000) 79,997 $ (180,003) 94,668 (85,335) 78,807 $ (6,528) 3.06 112,144 105,616 CF (260,000) 94,668 78,807 112,144 0.9091 0.8264 0.7513 0.6830 ($260,000)(260,000) $72,725 S (187275) $78,238(109,037) $59,209 $76,596 49,828) 3.6505 26,767 llty Index Discounted Pay 61 PLEASE RESPOND TO THESE QUESTIONS ON ANOTHER TAB 65 | Q#1 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off 67is 3 years? Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting (Investment) Decisions 69 70 (a) Estimate NPV, IRR and Payback Period of the project if 73 (b) As a CFO of the firm, which of the above two scenario (1) or (2) 75 Q#3 How would you explain to your CEO what NPV means? tax rate equals to 21%. Would you accept or reject the project? would you choose? Why? 76 77 Q#4 What are advantages and disadvantages of using only Payback method? 78 791 Q#5 What are advantages and disadvantages of using NPV versus IRR? 81 Q#6 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why? 82 85 Case and Template Sheet2 Sheet3 Ready Capital Budgeting Decisions CASE STUDY 10 (a 1 (b) 8) Sales for first year (1) 9) Sales 17 3) ($5,000) of sales in Year 1) 21/ 7) Equip. salvage value before tax $15,000 3) Cost of Capital (Discount Rate) CF1 CF2 CF3 (200,000) (5,000) (240,000) Would you accept the project based on Payback rule if project cut-off and have coficts 10 310,266 240,000 33.33% 240,000 14.81% 240,000 7.41% $35,544 $17,784 20,000 CF S (260,000) S (260,000) 9,997 $ (180,003) 94,668$ (85,335) 78,807 $ (6,528) 3.06 112,144 S 105,616 period 3.06 Year CF 000) S (260,000) 79,997 $ (180,003) 94,668 (85,335) 78,807 $ (6,528) 3.06 112,144 105,616 CF (260,000) 94,668 78,807 112,144 0.9091 0.8264 0.7513 0.6830 ($260,000)(260,000) $72,725 S (187275) $78,238(109,037) $59,209 $76,596 49,828) 3.6505 26,767 llty Index Discounted Pay 61 PLEASE RESPOND TO THESE QUESTIONS ON ANOTHER TAB 65 | Q#1 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off 67is 3 years? Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting (Investment) Decisions 69 70 (a) Estimate NPV, IRR and Payback Period of the project if 73 (b) As a CFO of the firm, which of the above two scenario (1) or (2) 75 Q#3 How would you explain to your CEO what NPV means? tax rate equals to 21%. Would you accept or reject the project? would you choose? Why? 76 77 Q#4 What are advantages and disadvantages of using only Payback method? 78 791 Q#5 What are advantages and disadvantages of using NPV versus IRR? 81 Q#6 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why? 82 85 Case and Template Sheet2 Sheet3 Ready
