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
Imagine you have been allocated $100,000 which is to be invested in 8 companies listed on the Australian Stock Exchange (ASX). You are required to have a balanced portfolio betwee

Citilink has just completed its 2010/11 management accounts. The directors are going to review the financial statements in the next board meeting. You have to prepare a FINANCIAL

#question.After read all the available information carefully, prepare a two page (double-spaced) essay and answer the following questions: Assume that we have the following data: C

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio points out how much investor are willing to pay for each dol

Explain the meaning of Buy-ins This  is  when  third  party  management  team  make  a  takeover  bid  and  then  run  business themselves. Finance sources are same as to buy-o

Once capital markets are integrated, it is hard for a country to maintain a fixed exchange rate. Explain why this may be so. Answer: one time capital markets are integrated int

Suppliers and customers Suppliers as well as customers are external stakeholders with their own set of objectives profit for the supplier and possibly customer satisfaction wit

Q. Application of concept of TVM Sometime the financial manager has to deal with the varying situation of the decision making where the concept of TVM needs to be applied in th

please give us the formula of price of equity shares of walter''s and gordon''s model

Question 1 Analyse the financial requirements of a FMCG company 2 If you are an investor and are interested in finding out the value of an amount of Rs 10,000 to be received