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on 3 atelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment presented t fe of the project

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on 3 atelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment presented t fe of the project A will be 6-Year's and Project B will be 5 years, and both projects carry same risk. Backco Inces e current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimuntu on repared estimates of the annual revenues and costs associated with each project as in the below table hoe de The 17% Alve me (RO) 18%Ay Projects A 240.000 Cost of equipment Working Capital needed Overhaul of the equipment in Projects B 470,000 60,000 80,000 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses. 180,000 90.000 Depreciation expense 60,000 74,000 70,000 90.000 Fixed out-of-pocket operating costs 6 year 5 years Life of Project year of the project A and project B respectively, for investment chewbere within the company DELL The working capital will be released 6th and sth. Required: The working capital will be released 6th Required: and sth. 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value tables are given below to determine the appropriate discount factoris) using the tables provided Table of present value $1 5% Period 1 6% 4% 0.962 8% 9% 10% 11% 0.952 0943 0.926 0917 0909 0901 2 0.925 0.907 0.890 0857 0.842 0826 0812 0.889 0.864 0,840 0.794 6.772 0751 0731 0855 0.823 0792 0735 0708 6683 0650 0650 0.822 0.593 0681 0.747 0.784 0621 0630 0.746 0535 0.500 0.705 0564 0.790 0.583 0547 0412 0513 0.665 0.760 0.711 0.502 0.434 0467 0.540 0.627 0.677 0.731 201 SARY nem n.509 ORIE 0703 DELL 3 4 5 6 7 8 year of the project A and project B respectively, for investment elsewhere within the compr 12% 12% 0800 M 6.707 6703 6712 5630 1413 0567 6543 0507 6480 0452 6425 0404 03M MA 7% 0.935 0873 0.816 0.763 0713 0.606 0.623 0.582 DEA 9.675 8.590 8310 0.454 6301 tis GATE STA 1316 Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The mo life of the project A will be 6-Year's and Project B will be 5 years, and both projects carry same risk. Batelco loc uses a discount rate of 12% After de the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (RO) 18% A fial anal prepared estimates of the annual revenues and costs associated with each project as in the below table Projects A 240,000 Cost of equipment Working Capital needed Projects B 470.000 80,000 60,000 Overhaul of the equipment in i 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180.000 90,000 74.000 60,000 Depreciation expense 70,000 90,000 Fixed out-of-pocket operating costs Life of Project 6 year 5 years Backspace Di DELL Projects A Projects B 470,000 240,000 Cost of equipment Working Capital needed Overhaul of the equipment in 60,000 80,000 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180,000 90,000 Depreciation expense 60,000 74,000 70,000 90,000 Fixed out-of-pocket operating costs 5 years 6 year Life of Project year of the project A and project B respectively, for investment elsewhere within the company FUL The working capital will be released 6th and sth. Required: 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value tables are given below to determine the appropriate discount factor(s) sing the tables provided. DELL Period 1 2 Period 1 2 3 4 5678 9 10 1% 0.990 1.970 2.941 4% 0.962 0.925 0.889 0,855 0.822 0.790 0.750 0.731 0.703 0676 5% 0.952 0.907 0.004 0.823 0.764 0.746 0.711 0.677 0.645 0.614 2% 0980 1.942 2.884 Table of present value $1 7% 9% 14% 0.935 8% 0.920 0.017 0.901 0.873 0.857 0842 0812 0.816 0.794 0.772 0.731 0.763 0.735 0.706 0850 0713 0.001 0650 0503 0.006 0.630 0.564 0.535 0563 0.623 0.647 0483 0513 0540 0.582 0.502 6434 0.467 0500 0544 15480 0301 0424 0306 0.352 0.422 0.508 0.463 Table For the Present Value of an Ordinary Annuity of $1 6% 5% 4% 3% 0943 0.952 0962 0.971 1.850 1833 1.914 1.686 2673 2.723 2.775 2.829 DELL 6% 0.943 0.000 0.840 0.702 0.747 0.705 0.665 0.627 0.502 9990 9090 10% 0.009 0820 0751 0.083 1200 12% [ES] 1707 6.712 0636 0567 0507 6452 0404 0.501 0.332 8% 0526 1.785 43% 0.005 6781 pers 0413 0543 0410 0435 0376 6.333 0.295 10% 14% 3:760 0675 0.582 2019 7045 BOW 1.236 2487 HOW WIED 0270 15% SAND $756 8372 DAYT $376 1564 22% 0503 TANS Period 2 3 4 5 6 10 11 12 13 14 15 1% 0.900 1970 2.941 3902 4.853 5.706 6.720 7.652 8.500 9.471 10.308 12.134 13.004 13.005 1676 2% 0.980 1942 2.884 13.000 0014 4714 5601 0472 7.326 8.162. 983 9.787 10.575 11:348 12.100 12.849 00 0506 9403 0422 0.3M 0302 Table For the Present value of an Ordinary Annuity.af.31 3% 4% M 0% 0971 0102 0.01 0543 1914 1306 1850 1835 2829 2.775 2723 3717 3.630 3546 4500 4412 4330 5417 $242 5076 0,230 6.002 5.7M 7,020 6733 0463 7.766 7.435 7.108 if 722 #111 0530 306 8761 0253 8003 0.385 9.900 $304 9800 10380 1966 10.635 11.200 31.038 10563 11.118 DELL LIFT 3405 4212 4917 5582 6210 802 1300 7867 8364 $295 6712 11822 AN 0.020 1763 3577 3312 300 4023 8206 5747 4247 6710 7.19 7.63 1904 244 540 we 10% 1500 1.798 2487 3.170 3791 4350 4000 535 STW 145 URS CAV 8314 7100 367 7400 was HERE 1.400 031 431 4.9804 AME www. 330 SIM YOU'R 4425 Kat on 3 atelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment presented t fe of the project A will be 6-Year's and Project B will be 5 years, and both projects carry same risk. Backco Inces e current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimuntu on repared estimates of the annual revenues and costs associated with each project as in the below table hoe de The 17% Alve me (RO) 18%Ay Projects A 240.000 Cost of equipment Working Capital needed Overhaul of the equipment in Projects B 470,000 60,000 80,000 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses. 180,000 90.000 Depreciation expense 60,000 74,000 70,000 90.000 Fixed out-of-pocket operating costs 6 year 5 years Life of Project year of the project A and project B respectively, for investment chewbere within the company DELL The working capital will be released 6th and sth. Required: The working capital will be released 6th Required: and sth. 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value tables are given below to determine the appropriate discount factoris) using the tables provided Table of present value $1 5% Period 1 6% 4% 0.962 8% 9% 10% 11% 0.952 0943 0.926 0917 0909 0901 2 0.925 0.907 0.890 0857 0.842 0826 0812 0.889 0.864 0,840 0.794 6.772 0751 0731 0855 0.823 0792 0735 0708 6683 0650 0650 0.822 0.593 0681 0.747 0.784 0621 0630 0.746 0535 0.500 0.705 0564 0.790 0.583 0547 0412 0513 0.665 0.760 0.711 0.502 0.434 0467 0.540 0.627 0.677 0.731 201 SARY nem n.509 ORIE 0703 DELL 3 4 5 6 7 8 year of the project A and project B respectively, for investment elsewhere within the compr 12% 12% 0800 M 6.707 6703 6712 5630 1413 0567 6543 0507 6480 0452 6425 0404 03M MA 7% 0.935 0873 0.816 0.763 0713 0.606 0.623 0.582 DEA 9.675 8.590 8310 0.454 6301 tis GATE STA 1316 Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The mo life of the project A will be 6-Year's and Project B will be 5 years, and both projects carry same risk. Batelco loc uses a discount rate of 12% After de the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (RO) 18% A fial anal prepared estimates of the annual revenues and costs associated with each project as in the below table Projects A 240,000 Cost of equipment Working Capital needed Projects B 470.000 80,000 60,000 Overhaul of the equipment in i 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180.000 90,000 74.000 60,000 Depreciation expense 70,000 90,000 Fixed out-of-pocket operating costs Life of Project 6 year 5 years Backspace Di DELL Projects A Projects B 470,000 240,000 Cost of equipment Working Capital needed Overhaul of the equipment in 60,000 80,000 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180,000 90,000 Depreciation expense 60,000 74,000 70,000 90,000 Fixed out-of-pocket operating costs 5 years 6 year Life of Project year of the project A and project B respectively, for investment elsewhere within the company FUL The working capital will be released 6th and sth. Required: 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value tables are given below to determine the appropriate discount factor(s) sing the tables provided. DELL Period 1 2 Period 1 2 3 4 5678 9 10 1% 0.990 1.970 2.941 4% 0.962 0.925 0.889 0,855 0.822 0.790 0.750 0.731 0.703 0676 5% 0.952 0.907 0.004 0.823 0.764 0.746 0.711 0.677 0.645 0.614 2% 0980 1.942 2.884 Table of present value $1 7% 9% 14% 0.935 8% 0.920 0.017 0.901 0.873 0.857 0842 0812 0.816 0.794 0.772 0.731 0.763 0.735 0.706 0850 0713 0.001 0650 0503 0.006 0.630 0.564 0.535 0563 0.623 0.647 0483 0513 0540 0.582 0.502 6434 0.467 0500 0544 15480 0301 0424 0306 0.352 0.422 0.508 0.463 Table For the Present Value of an Ordinary Annuity of $1 6% 5% 4% 3% 0943 0.952 0962 0.971 1.850 1833 1.914 1.686 2673 2.723 2.775 2.829 DELL 6% 0.943 0.000 0.840 0.702 0.747 0.705 0.665 0.627 0.502 9990 9090 10% 0.009 0820 0751 0.083 1200 12% [ES] 1707 6.712 0636 0567 0507 6452 0404 0.501 0.332 8% 0526 1.785 43% 0.005 6781 pers 0413 0543 0410 0435 0376 6.333 0.295 10% 14% 3:760 0675 0.582 2019 7045 BOW 1.236 2487 HOW WIED 0270 15% SAND $756 8372 DAYT $376 1564 22% 0503 TANS Period 2 3 4 5 6 10 11 12 13 14 15 1% 0.900 1970 2.941 3902 4.853 5.706 6.720 7.652 8.500 9.471 10.308 12.134 13.004 13.005 1676 2% 0.980 1942 2.884 13.000 0014 4714 5601 0472 7.326 8.162. 983 9.787 10.575 11:348 12.100 12.849 00 0506 9403 0422 0.3M 0302 Table For the Present value of an Ordinary Annuity.af.31 3% 4% M 0% 0971 0102 0.01 0543 1914 1306 1850 1835 2829 2.775 2723 3717 3.630 3546 4500 4412 4330 5417 $242 5076 0,230 6.002 5.7M 7,020 6733 0463 7.766 7.435 7.108 if 722 #111 0530 306 8761 0253 8003 0.385 9.900 $304 9800 10380 1966 10.635 11.200 31.038 10563 11.118 DELL LIFT 3405 4212 4917 5582 6210 802 1300 7867 8364 $295 6712 11822 AN 0.020 1763 3577 3312 300 4023 8206 5747 4247 6710 7.19 7.63 1904 244 540 we 10% 1500 1.798 2487 3.170 3791 4350 4000 535 STW 145 URS CAV 8314 7100 367 7400 was HERE 1.400 031 431 4.9804 AME www. 330 SIM YOU'R 4425 Kat

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