Choose the right answer

1.The cash flows of the project to build a factory in the US must be adjusted. Why?

a.The relevant cash flows for project evaluation are the incremental cash flows (cash flow gaps whether the project is undertaken or not).

b.If the company undertakes this project, not only will it generate additional cash in the US, but it will also generate less cash in Brittany.

c.The potential cash output decrease of the Brittany plant is caused by the US factory project.

2.The cash flows of the project to expand capacity in the Brittany plant must be adjusted. Why?

a.Would the company not undertake this project, it would sell the land and hold 22.5 million more.

b.Not selling the land represents an opportunity cost for the company.

c.The cash flow of year 10 includes the inflow due to the asset sale.

3.The Year 0 cash flow of the project to expand capacity in the Brittany plant must be adjusted, i.e.

a.It must be increased by 22.5 million.

b.It must be decreased by 22.5 million.

Answer the following

4.What is the Net Present Value of Project 1: build a factory in the US?

5.What is the Net Present Value of Project 2: enter Latin America?

6.What is the Net Present Value of Project 3: expand capacity at the existing Brittany plant?

7.What is the Net Present Value of Project 4: expand Chocafe operations?

8.What is the Net Present Value of Project 5: reduce the company carbon footprint?

9.What is the Net Present Value of Project 6: green the Chinese plant?

10.What is the Net Present Value of Project 7: buy the equipment of a bankrupt competitor?

11.What is the Internal Rate of Return of Project 1: build a factory in the US?

12.What is the Internal Rate of Return of Project 2: enter Latin America?

13.What is the Internal Rate of Return of Project 3: expand capacity at the existing Brittany plant?

14.What is the Internal Rate of Return of Project 4: expand Chocafe operations?

15.What is the Internal Rate of Return of Project 5: reduce the company carbon footprint?

16.What is the Internal Rate of Return of Project 6: green the Chinese plant?

17.What is the Internal Rate of Return of Project 7: buy the equipment of a bankrupt competitor?

18.If there were no budget constraint, which projects would you recommend?

19.Which projects would you recommend with the 75M budget?

Questions to be answered:--Choose the right answer 1. The cash flows of the project to build a factory in the US must be adjusted. Why? a. The relevant cash flows for project evaluation are the incremental cash flows (cash flow gaps whether the project is undertaken or not). b. If the company undertakes this project, not only will it generate additional cash in the US, but it will also generate less cash in Brittany. c. The potential cash output decrease of the Brittany plant is caused by the US factory project. 2. The cash flows of the project to expand capacity in the Brittany plant must be adjusted. Why? a. Would the company not undertake this project, it would sell the land and hold 22.5 million more. b. Not selling the land represents an opportunity cost for the company. c. The cash flow of year 10 includes the inflow due to the asset sale. 3. The Year 0 cash flow of the project to expand capacity in the Brittany plant must be adjusted, i.e. a. It must be increased by 22.5 million. b. It must be decreased by 22.5 million. Answer the following 4. 5. 6. 7. 8. What is the Net Present Value of Project 1: build a factory in the US? What is the Net Present Value of Project 2: enter Latin America? What is the Net Present Value of Project 3: expand capacity at the existing Brittany plant? What is the Net Present Value of Project 4: expand Chocafe operations? What is the Net Present Value of Project 5: reduce the company carbon footprint? 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. What is the Net Present Value of Project 6: green the Chinese plant? What is the Net Present Value of Project 7: buy the equipment of a bankrupt competitor? What is the Internal Rate of Return of Project 1: build a factory in the US? What is the Internal Rate of Return of Project 2: enter Latin America? What is the Internal Rate of Return of Project 3: expand capacity at the existing Brittany plant? What is the Internal Rate of Return of Project 4: expand Chocafe operations? What is the Internal Rate of Return of Project 5: reduce the company carbon footprint? What is the Internal Rate of Return of Project 6: green the Chinese plant? What is the Internal Rate of Return of Project 7: buy the equipment of a bankrupt competitor? If there were no budget constraint, which projects would you recommend? Which projects would you recommend with the 75M budget