Discuss the below:
1. Consider two investment projects with the following cash flow transactions. Computer the rate of return for each project.
|
n
|
Project 1
|
Project 2
|
|
0
|
-5000
|
-5000
|
|
1
|
|
2500
|
|
2
|
|
4000
|
|
3
|
8250
|
|
2. a. Define and give types of Manufacturing Cost, Nonmanufacturing Cost, and Opportunity Cost.
b. Defined how Differential Cost and Differential Revenue are involved in choosing among alternatives
c. What is the difference between Gross Margin, Operating Margin, and Net Profit Margin?
3. Using Excel, identify all positive rates of return for each project
|
Net Cash Flow
|
|
n
|
A
|
B
|
C
|
D
|
|
0
|
-2500
|
-2000
|
-10000
|
-2500
|
|
1
|
100
|
800
|
5600
|
-1360
|
|
2
|
100
|
600
|
4900
|
4675
|
|
3
|
100
|
500
|
-3500
|
2288
|
|
4
|
2100
|
700
|
7000
|
|
|
5
|
|
|
-1400
|
|
|
6
|
|
|
2100
|
|
|
7
|
|
|
900
|
|
4. John paid $60,000 for his brand new Mercedes Benz, ten years later he sold it to his brother for $8,400. What was his average rate of depreciation and what was the car worth at the end of year seven?
5. Consider the independent investment projects in the following table: Compute the project worth of each project at the end of six years with variable MARR as follows: 10% for n = 0 to n = 3 and 15% for n = 4 to n = 6
|
Project Cash Flows
|
|
n
|
Project X
|
Project Y
|
|
0
|
-800
|
-500
|
|
1
|
150
|
150
|
|
2
|
150
|
150
|
|
3
|
350
|
150
|
|
4
|
-200
|
100
|
|
5
|
500
|
100
|
|
6
|
400
|
|
6. Joe's starting salary as a mechanical engineer is around 90,000. Joe is planning to place a total of 10% of his salary each year in the mutual fund. Joe expects a 5% salary increase each year for the next 30 years of employment. If the mutual fund will average 8% annual rate of return over the course of his career what can Joe expect at retirement.