Question 1

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Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The economic life of the project A will be 6-Year's and Project B will be 5 years, and

both projects carry same risk. Batelco Inc uses a discount rate of 12%. After considering the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROI) 18%. A

financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table:

Cost of equipment

Working Capital needed

Overhaul of the equipment in

two years

Annual revenues and costs:

Sales revenues

Variable expenses

Depreciation expense

Fixed out-of-pocket operating

costs

I Life of Project

Projects A

240,000

60.000

12000

Projects B

470,000

80,000

14000

375,000

180.000

60.000

90.000

6 vear

300.000

90.000

74.000

70.000

5 years

The working capital will be released oth and sth year of the project A and project B respectively, for investment elsewhere within the company.

Required:

1. Calculate the net present value for each project. (4 Marks)

2. Calculate the simple rate of return for each product. (4 Marks)

Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark)

)LG

Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The economic life of the project A will be 6-Year's and Project B will be 5 years and

both projects carry same risk. Batelco Inc uses a discount rate of 12%. After considering the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROI)

financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table:

working capital will be released 6th and sth year of the project A and project B respectively, for investment elsewhere within the company.

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)

plz help me

& compre QATARD Question 11 Beco Tuis vendeving two mutuody velesive project A and both projects carry sane risk Bateico-toe ms a discount nee of 12% ficial lyst prepared estimates of the sal revenues ad cos Each project replies a laatial anvestat as presented as the below table. The economic ide of the project A will be 6-Year's and Project will be 5 years, and After confering the event ecotic situation Batelco Inc. has set a masini payback period it 4 years and minim rern on investment (0) 19% A aled with each project is the below table Projects A 240,000 Projects 470,000 Cew of ecol Working Capital oceded Overhead of the equipment 00.000 80.000 12000 14000 eyes Assal revenues and cont Sales revenues 375.000 300,000 Vanable expanses 180.000 00.000 Deprecucion expertie 60.000 74,000 Fixed out-of-pocker operating 90.000 70,000 Con Life of Project year 5 years The working capital will be released oth and sth year of the project A and project I respectively, for investment elsewhere within the company Required 1.Calculate the net present value for each project (4 Marks) 2 Calculate the simple rate of return for each product (4 Marks) Which of the two projects (if either) would you recommend that Bateico lac accept? Why? (2 Mark Present value tables are given below to determine the appropriate discount factori song the tables provided 14 12 . . T N H 2 1 SEGERE... Pe . NAT 4800 6.700 7602 8.300 Prind 18 tam 2941 2 LIFE 4 1038 1255 12:134 BIVS p M DO 1942 FFF.C NOVE 4112 AM 370 10.575 11346 13004 12.10 13666 12049 ALTACTHano 4714 2401 5422 MEZ A 415 war 2000 the +393 4211 th NE wy 134 2321 WC. 4.300 2417 *350 Crom WW.C 500 9253 3904 0630 11290 900 para contracting the TS 140 1944 LMA www 4700 TIM AFTE Fak EAS TELE NE bora UN 2713 3630 4452 3000 BO 6230 7410 em ENER NEK 5300 10000 TODA M SHI THE www "ENT KIT TH ANT BOLA me A K 20 12340 NEWS Shor DUD Jus (106 7.722 and OFE $394 pan W FRK WATE PIC ANI eru EMM 401 4844 2011 54 Oso Mak kon 10400 no 4912 d 15.00 SE 6.213 www YEW 1722 330 8052 5.200 9782 3300 439 673 www 140 451 1150 (1971 501 NE 840 Tahit for the Present Vahetan Qonary All res lo 200 LPM 6.90 KON TA DIE INFE FOR 200 INS INCHE Th 710 039 7500 100k 324 3540 IME DIE 4312 VE THE 4514 8547 ADES Te Pwg M 31/0 379 300 www 8.336 5200 KM 500 K014 100 36 12000 ML ANE SILE BALL BE OLEA 6613 THE SAH 4300 2% pom 1894 12400 bor SUNC www ASEE 14.900 4000 0000 35306 TH FORK AG Kan NAV IMD Of ww LAVE KAME 31434 4301 ALW MS and INCR +17 7845 ma ALE 6412 CATE INC dice t UN $0 ATES 1483 HAVE 1959 SAM P.ITE SH EIFE ANCA 200 TRAN 21 WWW VES MKA www. 835 ME 1448 9512 FAC JAU FINA 53321 8205 201 GeoN Questi p en is considering to annually exchave And. Each project requires an initial vestment as presented in the below table. The economie life of the project A will be 6-Year's and Project will be 3 years, and bo project any skatele Ineses contre of Affet coudering the commt economic situou Batelco le has set a masina payback period of 4 years and more on invent (OD 19 A financial analyst, prepared estimates of the sunal revenues and costs associ with each project is the below table Cost of epupmees Projects A 240,000 Project T 470.000 Working Capital needed 40.000 10,000 Overbast of the opipped in 12000 14000 two years Annual revenues and cost Sales revenues 325.000 300,000 Viciable expenses 140,000 90.000 Depreciation expense 00.000 24,000 90.000 70.000 Fixed out-of-pocket operating costs Life of Project 6 year 5 years The working capital will be released th and 5th year of the project A and project B respectively, for investiment elsewhere within the company. Required: Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) Which of the two projects (if either) would you recommend that Batelco Inc. accepe? Why? (2 Mark) Cost of equipment Working Capital needed Overhaul of the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs Life of Project Projects A 240,000 60,000 12000 375,000 180,000 60,000 90,000 6 year Projects B 470,000 80,000 14000 300,000 90,000 74,000 70,000 5 years