The management of Knuckle Down Lider reviewing the company's capvestment options for the coming you, and are considering project Project A would com 000 now, and would eam the following cash role 2nd year C12.000 6.000 The capital equipment purchased at the start of the project could be sold for 5.000 at the start of the Projects would involve a current oulay of 4,000 on capital equipment and 20,000 on working capital. The profits from the project would be as follows Sales Variable costs Contribution Find os Pro E 75.000 50,000 25.000 10.000 15.000 90.000 60.000 30.000 10.000 20.000 42,000 28.000 14.000 8.000 6.000 Fixed costs include an annual charge of 4.000 for depreciation. At the end of the third year the working capital investment would be recovered and the equipment would be sold for 5.000 Project would involve a current outlay of 650.000 on equipment and 15.000 on working capital. The investment in working capital would be increased to 21.000 end of the first year. Annual cash profits would be 18.000 for five years, at the end of which the investment in working capital would be Project would involve an outlay of 20.000 now and a further out of 20.000 her one year Cash profits there would be as follows. 2nd year 15.000 3rd yes 12.000 ho years 68.000 Project is a long term project, involving an immediately of 2.000 and wnual cash profits of 64.500 in perpetuity Project is another long-term project involving an immediately of $20,000 and annual cash profits as follows. 1st to sth years 5.000 8th to 10th years 54.000 11h your cards for ever 3.000 The company decounts al projects of ten years duration or cool capital of 128, and a Ignoration Required Call the NPV of each project, and determine which should be undertaken by the company D) Calculate the projects A, Cande (17 Case Study Analysis 1 The management of Matrix Stores Sdn. Bhd. are in the process of exploring the company's investment opportunities. There are six opportunities, the details and relevant information for which is as follows: Project A would cost SR 29 000 now, and would generate the following cash flows: Year SR -- 8,000 2 12,000 10,000 3 4 6,000 The equipment included in the cost of the investment could be resold for SR 5,000 at the start of year 5. Project B would involve a current outlay of SR 44,000 on capital equipment and SR 20,000 on working capital. The profits from the project would be as follows: 1 Fixed cost Year Sales Variable Contribution Profit Costs SR SR SR SR SR 1 50,000 10,000 15,000 2 75,000 90.000 42,000 60,000 25,000 30,000 14,000 10.000 20,000 6,000 3 28,000 8,000 Fixed costs include an annual charge of SR 4,000 for depreciation; all the other fixed costs are avoidable. At the end of year 3 the working capital investment would be recovered and the equipment would be sold for SR 5,000. Project C would involve a current outlay of RM50,000 on equipment and SR 15,000 on working capital. The investment in working capital would be increased to SR 21,000 at the end of the first year. Annual cash profits would be SR 18,000 per annum for five years, at the end of which the investment in working capital would be recovered. Project D is a long-term project, involving an immediate outlay of SR 32,000 and annual cash profits of SR 4,500 per annum in perpetuity. Project E is another long-term project, involving an immediate outlay of SR 20,000 and annual cash profits as follows: Year SR 1-5 6 - 10 5,000 4,000 11 in perpetuity 3,000 The company discounts all projects of ten years' duration or less at a cost of capital of 12%, and all longer projects at a cost of 15%. You are required to; (a) Calculate the NPV of each project (b) determine which project should be undertaken by the company. (c) Calculate The Payback period for each project. (d) Determine which project should be undertaken by the company based on payback rule. I The management of Knuckle Down Lider reviewing the company's capvestment options for the coming you, and are considering project Project A would com 000 now, and would eam the following cash role 2nd year C12.000 6.000 The capital equipment purchased at the start of the project could be sold for 5.000 at the start of the Projects would involve a current oulay of 4,000 on capital equipment and 20,000 on working capital. The profits from the project would be as follows Sales Variable costs Contribution Find os Pro E 75.000 50,000 25.000 10.000 15.000 90.000 60.000 30.000 10.000 20.000 42,000 28.000 14.000 8.000 6.000 Fixed costs include an annual charge of 4.000 for depreciation. At the end of the third year the working capital investment would be recovered and the equipment would be sold for 5.000 Project would involve a current outlay of 650.000 on equipment and 15.000 on working capital. The investment in working capital would be increased to 21.000 end of the first year. Annual cash profits would be 18.000 for five years, at the end of which the investment in working capital would be Project would involve an outlay of 20.000 now and a further out of 20.000 her one year Cash profits there would be as follows. 2nd year 15.000 3rd yes 12.000 ho years 68.000 Project is a long term project, involving an immediately of 2.000 and wnual cash profits of 64.500 in perpetuity Project is another long-term project involving an immediately of $20,000 and annual cash profits as follows. 1st to sth years 5.000 8th to 10th years 54.000 11h your cards for ever 3.000 The company decounts al projects of ten years duration or cool capital of 128, and a Ignoration Required Call the NPV of each project, and determine which should be undertaken by the company D) Calculate the projects A, Cande (17 Case Study Analysis 1 The management of Matrix Stores Sdn. Bhd. are in the process of exploring the company's investment opportunities. There are six opportunities, the details and relevant information for which is as follows: Project A would cost SR 29 000 now, and would generate the following cash flows: Year SR -- 8,000 2 12,000 10,000 3 4 6,000 The equipment included in the cost of the investment could be resold for SR 5,000 at the start of year 5. Project B would involve a current outlay of SR 44,000 on capital equipment and SR 20,000 on working capital. The profits from the project would be as follows: 1 Fixed cost Year Sales Variable Contribution Profit Costs SR SR SR SR SR 1 50,000 10,000 15,000 2 75,000 90.000 42,000 60,000 25,000 30,000 14,000 10.000 20,000 6,000 3 28,000 8,000 Fixed costs include an annual charge of SR 4,000 for depreciation; all the other fixed costs are avoidable. At the end of year 3 the working capital investment would be recovered and the equipment would be sold for SR 5,000. Project C would involve a current outlay of RM50,000 on equipment and SR 15,000 on working capital. The investment in working capital would be increased to SR 21,000 at the end of the first year. Annual cash profits would be SR 18,000 per annum for five years, at the end of which the investment in working capital would be recovered. Project D is a long-term project, involving an immediate outlay of SR 32,000 and annual cash profits of SR 4,500 per annum in perpetuity. Project E is another long-term project, involving an immediate outlay of SR 20,000 and annual cash profits as follows: Year SR 1-5 6 - 10 5,000 4,000 11 in perpetuity 3,000 The company discounts all projects of ten years' duration or less at a cost of capital of 12%, and all longer projects at a cost of 15%. You are required to; (a) Calculate the NPV of each project (b) determine which project should be undertaken by the company. (c) Calculate The Payback period for each project. (d) Determine which project should be undertaken by the company based on payback rule