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Task 4: The firm is planning to invest up to 65 million next year. The information about the available investment projects is given in the
Task 4: The firm is planning to invest up to 65 million next year. The information about the available investment projects is given in the table below. Project Initial investment Internal rate of Net present value, Profitability index millions of return millions of A 50 15% 12 B 35 19% 15 C 30 28% 42 D 25 26% 1 E 15 20% 10 F 10 37% 11 10 25% 13 H 1 18% 0.1 Assuming the projects are not divisible, use the profitability Index(PI) as a criterion to determine the best combination of projects. (Show the calculations of the profitability indexes in the final column of the table) IOT molo Task 5: The firm has gathered the following information on a replacement project: Purchase price of the new machine Shipping and installation charge Sale price of old machine Book value of old machine Inventory increase if the new machine is installed Accounts payable increase if the new machine is installed Marginal tax rate Calculate the initial cash flow. 8,000 2,000 6,000 2,000 3,000 1,000 25%
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