Determine the return on invested capital, Financial Management

1.      Consider the following two investment alternatives

 

Net cash flow

 

End of year

Machine A

Machine B

0

-$2,800

-2000

1

-1900

-2500

2

-1800

-2000

3

-1700

+200

Suppose that your firm needs either machine for only 2 years. The net proceeds from the sale of machine B are estimated to be $200. What should be the net proceeds from the sale of machine A so that both machines could be considered economically indifferent at an interest rate of 10%?

2.      Consider the following two mutually exclusive investment proposals.

End of year

Project A1

Project A2

0

-200

-300

1

200

440

2

243

100

Rate of Return

71.03%

66.66%

a)  Determine the range of MARR where project A1 is preferred over project A2

b)  If you use the NPW criterion at Marr=15%, project A2 will be selected. Using the internal rate of return criterion, demonstrate that you will select the same project at MARR of 15%. In doing so, determine the return on invested capital.

Posted Date: 3/2/2013 2:45:53 AM | Location : United States







Related Discussions:- Determine the return on invested capital, Assignment Help, Ask Question on Determine the return on invested capital, Get Answer, Expert's Help, Determine the return on invested capital Discussions

Write discussion on Determine the return on invested capital
Your posts are moderated
Related Questions
What is Control risk That material misstatement could take place and not be detected, or prevented on a timely basis, by accounting and internal control systems. All audits

TYPES OF FINANCE FUNCTIONS/ DECISIONS The most main decisions in finance relate to procuring funds, investing them in profitable projects or assets, operate for the year and a

Dividend cover Dividend cover measures the relationship among earnings per share and net dividends per share. The higher the altitude of dividends for any given level of EPS t

What is the time value of money? The time value of money signifies that money you hold in your hand today is worth more than money you expect to receive in the future. Likewise

What is the Hirfindahl-Hirschman Index? A: The Hirfindahl-Hirschman Index, or HHI, is the standard measure employed by economists to evaluate market concentration. The greater

Treasury Notes or T-notes are the securities issued with maturities of more than one year and but not more than 10 years. All these securities are coupon securiti

To determine Henkel's corporate beta, unlever (and relever) the ordinary least squares (OLS) market betas for each company in the European Household and Personal Care segment. Pric

Illustrate the term quality of benefits It is clear from Table that total returns associated with two alternatives are identical in a normal situation but range of variati


that the business has far fewer linens than it needs, so he makes a major linen purchase on open account. Which of the following terms refers to the fact that partners Ma and Runni