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required i just need an answer for part G. urgent Bravo Corporation As she headed toward her boss's office, Naome Problem, chief operating officer for

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i just need an answer for part G. urgent
Bravo Corporation As she headed toward her boss's office, Naome Problem, chief operating officer for the Bravo Corporation-a computer services firm that specialized in airborne support-wished she could remember more of the training in financial theory that she had been exposed to in college. Naome had just completed summarizing the financial aspects of four capital investment projects that were open to Bravo during the coming year, and she was faced with the task of recommending which should be selected. What concerned her was the knowledge that her boss; Kay Marsh, a "street smart" chief executive, with no background in financial theory, would immediately favour the project that promised the highest gain in reported net income. Naome knew that selecting projects purely on that basis would be incorrect, but she wasn't sure of her ability to convince Kay, who tended to assume financiers thought up fancy methods just to show how smart they were. As she prepared to enter Kay's office, Naome pulled her summary sheets from her briefease and quickly reviewed the details of the four projects, all of which she considered to be equally risky. 1. A proposal to add a jet to the company's fleet. The plane was only six years old and was considered a good buy at $315,000. In return, the plane would bring over $650,000 in additional revenue during the next five years with only about $59,000 in operating costs. (See Table 1 for details.) Table 1 Financial analysis of project. A: Add a twin-jet to the company's fleet 2. A proposal to diversify into copy machines. The copy machines would cost $735,000, which would be amortized over a 20-year period. The new business was expected to generate over $1.5 million in sales over the next five years, and over $850,000 in after-tax earnings. (See Table 2 for details.) Table 2 - Proposal to diversity into copy machines. 3. A proposal to buy a helicopter. The machine was expensive and, counting additional training and licensing requirements, would cost $44,000 a year to operate. However, the versatility that the helicopter was expected to provide would generate over $1.7 million in additional revenue, and the purchase would give the company access to a wider market as well. (See Table 3 for details.) Table 3 - Proposal to buy a helicopter 4. A proposal to begin operating a fleet of trucks. Ten could be bought for only $53,550 each, and the additional business would bring in almost $700,000 in new sales in the first two years alone. (See Table 4 for details.) Table 4 - Proposal to begin operating a fleet of trucks f. According to the NPV method, i. Which project should be chosen? How does this differ from the answer under the IRR? ii. If Kay had not put a limit on the size of the capital budget, under the NPV method which projects would be accepted? Do the NPV and IRR both reject the same project(s)? Why? iii. Given all the facts of the case, are you more likely to select project A or C ? g. According to the PI method, i. Which project should be chosen? ii. Does your answer conflict with the NPV method? Why? Which method suggests the best project

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