Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need the answer quickly Accounting Investment Decision Criteria: Problems You are hired as an investment consultant for a start-up company, AAA Inc. AAA plans

i need the answer quicklyimage text in transcribed

Accounting Investment Decision Criteria: Problems You are hired as an investment consultant for a start-up company, AAA Inc. AAA plans to invest PhP2 million in equipment for a 5-year investment project. It includes installation and setup costs. However, the company is not 100% certain about it, so they assigned various probabilities to account for risks. Here are the Year 1 sales for each scenario: Worst (20%) Base (50%) Best (30%) 1,500,000 4,500,000 7,000,000 The gross profit margin across project's life is 45%. The OPEX (all cash, excluding depreciation & amortization) ratio across project's life is 20%. The equipment is being depreciated on a straight line o salvage value basis. The growth rate in sales are shown in the next slide. Investment Decision Criteria: Problems Year 2 3 Worst (20%) Base (50%) 1% 4% 1.5% 6% 2% 8% 2.5% 9% Best (30%) 6% 9% 11% 14% 4 5 The applicable tax rate is 30%. At the end of the project's life, the company can sell the equipment at the following rates: Worst (20%) Base (50%) Best (30%) 0 (no sale) 150,000 200,000 JTD 2020 CONDONA A 2020 Investment Decision Criteria: Problems The discount rate is 11.5%. Compute for: NPV . PI . IRR . MIRR Payback Discounted payback

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

43 Ways To Finance Your Feature Film A Comprehensive Analysis Of Film Finance

Authors: John W. Cones

3rd Edition

0809326930, 978-0809326938

More Books

Students also viewed these Finance questions