Question
There are four projects (Potential Jobs) and you are tasked with analyzing to see in which order should we fund the projects in terms of
There are four projects (Potential Jobs) and you are tasked with analyzing to see in which order should we fund the projects in terms of NPV (Net Present Value) and IRR (Internal Rate of Return). *what's the reasoning behind the specific order of the projects*
| Name (Potential Job): | Job Z |
| Purchase Price: | $50,000 |
| Salvage Value: | $0 |
| Recovery Period (3,5,7,15,20 yrs): | 15 |
| Asset Life (2-20 yrs): | 17 |
| Expensing ($10,000 maximum): | $7,000 |
| Income Tax Rate: | 22.00% |
| Percent Financed by Loan: | 82.00% |
| Loan Interest Rate: | 6.00% |
| Loan Length (years): | 7 |
| Opportunity Cost: | 5.00% |
| Cash Income: | $5,000 |
| Cash Expenses: | $1,600 |
| Inflation Rate: | 2.00% |
| Name (Potential Job): | Job A |
| Purchase Price: | $24,800 |
| Salvage Value: | $1,000 |
| Recovery Period (3,5,7,15,20 yrs): | 5 |
| Asset Life (2-20 yrs): | 20 |
| Expensing ($10,000 maximum): | $5,000 |
| Income Tax Rate: | 28.00% |
| Percent Financed by Loan: | 66.00% |
| Loan Interest Rate: | 7.00% |
| Loan Length (years): | 5 |
| Opportunity Cost: | 5.00% |
| Cash Income: | $10,000 |
| Cash Expenses: | $1,600 |
| Inflation Rate: | 5.00% |
| Name (Potential Job): | Job P |
| Purchase Price: | $36,000 |
| Salvage Value: | $5,000 |
| Recovery Period (3,5,7,15,20 yrs): | 3 |
| Asset Life (2-20 yrs): | 15 |
| Expensing ($10,000 maximum): | $7,000 |
| Income Tax Rate: | 26.00% |
| Percent Financed by Loan: | 75.00% |
| Loan Interest Rate: | 10.00% |
| Loan Length (years): | 6 |
| Opportunity Cost: | 6.00% |
| Cash Income: | $5000 |
| Cash Expenses: | $1,600 |
| Inflation Rate: | 4.00% |
| Name (Potential Job): | Job F |
| Purchase Price: | $24,000 |
| Salvage Value: | $2,000 |
| Recovery Period (3,5,7,15,20 yrs): | 7 |
| Asset Life (2-20 yrs): | 10 |
| Expensing ($10,000 maximum): | $10,000 |
| Income Tax Rate: | 28.00% |
| Percent Financed by Loan: | 75.00% |
| Loan Interest Rate: | 9.00% |
| Loan Length (years): | 5 |
| Opportunity Cost: | 6.00% |
| Cash Income: | $15000 |
| Cash Expenses: | $1,240 |
| Inflation Rate: | 5.00% |
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The Commercial Aircraft Finance Handbook
Authors: Ronald Scheinberg
1st Edition
1781372608, 978-1781372609
