Financial Analysis for Managers Research Paper

Financial Analysis for Managers - Research Paper Examplec. Which project is most attractive to a rigid that can raise an unlimited amount of funds to pay for its investment projects Which project is most attractive to a firm that is limited in the funds it can raisec) jump out B would be the choice for a firm with no hassle in system funds. The reason being that though the project has a lower advantageousness index and even a lower NPV but its consistent cash flows could be attractive for big investors. Such investors are called Mutually Exclusive. How ever when the funds are limited, then contrive A would be the choice as the Profitability Index and NPV are both favorable and this shows the best method to use the funds efficiently. nippy Copies may buy a high-volume copier. The political machine cost $100,000 and go forth be depreciated straight-line over 5 years to a salvage value of $20,000. Kinky anticipates that the machine actually can be sold in 5 years for $30,000. The machine will save $20,000 a year in labor costs but will require an increase in on the job(p) capital, mainly paper supplies, of $10,000. The firms marginal tax rate is 35 percent, and the discount rate is 8 percent. Should kinky buy the machine... = $ 12.17Thus from the calculations it is evident that Project A has a higher NPV.b) Profitability Index Formula = Present value of the cash flows/ initial investment.Profitability Index for Project A = (18.182 + 16.528 + 15.026)/36 = 1.38Profitability Index for Project B = (22.7275 + 20.66 + 18.7825)/50 = 1.24Hence the Profitability Index for Project A is higher.c) Project B would be the choice for a firm with no hassle in arranging funds. The reason being that though the project has a lower Profitability index and even a lower NPV but its consistent cash flows could be attractive for big investors. Such investors are called Mutually Exclusive. How ever when the funds are limited, then Project A would be the choice as the Profitability Index and NPV are both favorable and this shows the best method to use the funds efficiently.Q.23. Project Evaluation. Kinky Copies may buy a high-volume copier. The machine costs $100,000 and will be depreciated straight-line over 5 years to a salvage value of $20,000. Kinky anticipates that the machine actually can be sold in 5 years for $30,000. The machine will save $20,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $10,000. The firms marginal tax rate is 35 percent, and the discount rate is 8 percent. Should kinky buy the machineAns. 23 In this Project evaluation, we will go step by step to analyze the acceptance of this machine by the firm.First we will take in consideration all the costs of this project.1) The Depreciation cost.Depreciation (Straight Line) formula = Total cost - salvage value/ consider of years to be used.Depreciation for the copier = 100,000 - 20,000/5 = 16,000Thus the total