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Capital Budgeting Exercises

MBA Health $14$

Deadline: $20$ April $20241159$ PM $(5$ points each$)$

Ginas Restaurant is considering a project with the following expected Cash Flow $($ in Million pesos$)$

$\backslash$table$[[$Year $0,-150],[1,90],[2,70],[3,90],[4,100]]$

What is the project's payback?

$2.$ The Green Earth Eco Store is considering a project that will entail buying a recycling machine worth $80,000$ and expected cash flow of $30,000$ at the end of the year for the next $4$ years. If the required rate of return is $10\%$ what is the project's NPV$?$

$3.$ East West Hospital will purchase a new dialysis machine that will require an initial outlay of $$10,000$ but will generate the following free cash flows In the ff periods:

Year $1$:$$8000$

Year $2$: $$5000$

Year $3$$$2000$

What is the internal rate of return of East West for this project?

$4.$ Hi Precision is considering $2$ mutually exclusive projects A and $B$ that have the same risk levels with a Weighted average cost of capital of $12$ percent and have the following Cash Flow profies:

In Thousand Pesos

$\backslash$table$[[$Year$,,$Q$,1,2,3,4],[$Project$,$A$,-1000,100,300,400,700],[,$B$,-1000,1000,100,50,50]]$

a$.$ What are the NPVs of the two projects

b$.$ What are the IRRs of the two projects

c$.$ What project will you recommend to maximize shareholders value of Hi Precision?