G 5 Project Investment Annual Earnings 6 AAA $ 800,000 $ 155,000 7 BBB $1,500,000 $ 190,000 $2,700,000 $ 310,000 9 DDD $ 300,000 $ 80,000 10 11 REQUIRED 12 ) Jordan is currently evaluated based on his Return on Investment (ROI). (2 marks) 13 if the required rate of return is 16%, which projects would be accepted? 14 ) if they can only choose one project, which would they choose? 15 8) Elevency Inc. has decided to change its investment stategy to focus on Residual income analysis, which project should Jordan choose under these 16 new requirements it the company requires a minimum required return of 12%? (2 marks) 17 C) Donny, a manager in another investment centre, has presented Jordan with a new 7 year project opportunity to replace one of the factory machines The details of this investment are below: 18 19 Cost of new machine $ 200,000 20 Useful life of the new machine 7 years 21 Salvage value of the old machine S 20,000 22 salvage value of new machine S 25,000 23 24 Additional information: 25 The new machine has an automation feature that will eliminate the need of one factory worker, saving $45,000 per year in salary. 26 Annual repairs would be required for the machine at a cost of $9,000 per year. The old machine did not require any maintenance costs. 27 Elevency Inc. has a cost of capital for new projects of 14% 28 29 Calculate the Net Present Value of this project. Should this new project be pursued? (6 marks)