This problem has been submitted once already but the solution did not provide me any feedback to my how the calulations are made. I am looking to uncover how the present worth of each investment option was solved for? How the IRR was calulated? How the optimum portfolio annual returns were decided upon that are used in the IRR? Please provide detailed instructions for how those items were claulated. I do not need the overall answer to the problem listed below, just the items mentioned previously.
Polaris Industries has $1,250,000 available for additional innovations on the Victory Vision motorcycle. These include the ?ve indivisible, equal-lived alternatives, each of which guarantees the investment can be exited after 6 years with the initial investment returned. In addition, each year Polaris will receive an annual return as noted below. MARR is 15%.
Investment Initial Investment Annual Return
1 $350,000 $90,000
2 $300,000 $85,000
3 $250,000 $75,000
4 $500,000 $130,000
5 $400,000 $115,000
For the original problem:
a. Which alternatives should Polaris select for the optimum portfolio?
b. What is the present worth for the optimum investment portfolio?
c. What is the IRR for the portfolio?
In addition to the original problem statement, Polaris has noted that investments 1, 2, and 4 are mutually exclusive, and marketing believes at least 3 investments must be made.
d. Which alternatives should now be selected?
e. What is the present worth for the optimum investment portfolio?
f. What is the IRR for the optimum investment portfolio?
Return to the original problem statement:
g. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current limit on investment capital, (2) plus 20%, and (3) minus 20%.
h. Determine the optimum portfolio (state the investments selected and the port-folio PW) using (1) the current MARR, (2) plus 20% and (3) minus 20%.