You are part of the Project Evaluation Committee in ProTiga Bhd., one of the automotive manufacturer in South East Asia. The manufacturer is shifting the focus of its previous 'Number One Choice for Local" to "A Leading Electric Vehicle Company in South East Asia". Below are the projects to evaluate under the responsibility of Project Evaluation Committee. a) b) Acquire an existing RM1,3 billion Electric Vehicle Company from China for technology transfer purpose with the annual saving of RM200 million for 10 years. Assemble professional manpower to strengthen the ProTiga Racing Team with investment of RM700,000 and annual saving of RM150,000 for 5 years. The management has considered the expenses required to continue the business of ProTiga Berhad in coming 10 years. Thus, the management has to consider the additional expenses in the annual income with 5% discount rate. Using Net Present Value (NPV) method, determine which project between (a) and (b) that should be given most priority for the next 5 years and 10 years respectively? Explain the answer.

You are part of the Project Evaluation Committee in ProTiga Bhd., one of the automotive manufacturer in South East Asia. The manufacturer is shifting the focus of its previous 'Number One Choice for Local" to "A Leading Electric Vehicle Company in South East Asia". Below are the projects to evaluate under the responsibility of Project Evaluation Committee. a) b) Acquire an existing RM1,3 billion Electric Vehicle Company from China for technology transfer purpose with the annual saving of RM200 million for 10 years. Assemble professional manpower to strengthen the ProTiga Racing Team with investment of RM700,000 and annual saving of RM150,000 for 5 years. The management has considered the expenses required to continue the business of ProTiga Berhad in coming 10 years. Thus, the management has to consider the additional expenses in the annual income with 5% discount rate. Using Net Present Value (NPV) method, determine which project between (a) and (b) that should be given most priority for the next 5 years and 10 years respectively? Explain the answer.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 7E

See similar textbooks

Similar questions

ABC Corporation was able to issue 20-year P10,000,000-face value bonds with interest of 8% per annum, due every quarter. It incurred issuance cost of P350,000 but it got net proceeds of P10,200,000 from the issuance. The annual effective cost of these bonds is closest to *a. 7.8017%b. 8.1545%c. 8.1527%d. 7.7993%
Ali is a Planning engineer considered the following three mutually exclusive investment projects (A, B, and C) at PTUK. He summarized the relevant data provided for these projects as; for project A, the initial investment is -200 , annual return is 22 and the salvage value is 200. For project B, the initial investment is -4000, salvage value is 2600 and the annual return is 620. For project C, the initial investment is -5450, annual retum is 740 and salvage value is 4300. The useful life for these projects is similar which is 5 years, and MARR=10% . Which alternatives are feasible based on their ROR.
some compliance issues identified by the auditor-general of south africa and national treasury are related to the budget process for several municipalities in the north west province. as part of the term of rference, oracle Pty is required to attend to this issue. provide a critical discussiin the budget process including timelines for municipalities in south africa
Dilute hydrogen peroxide (H2O2) is produced in the facility where you work as an engineer. company customer to invest in an additional concentration unit for the production of concentrated hydrogen peroxide (H2O2) in line with the demands of aims. For the establishment of the required unit, the finance company recommends the following financing model for 3 years: First year installments of 100,000 TL per month, 150,000 TL per month in the second year and 175,000 TL per month in the third year. Also at 36 MonthsAn additional balloon payment of 700.000 TL will be made. The monthly interest rate is 2.5%. a) If this proposed financing model was not chosen and all installments were paid equally, equal monthly installments. What would the amount be? b) If no payment was made for this additional concentration facility for 3 years, and at the end of the 3rd year, one-time payment. If so, what would be the amount to be paid? Find what is required by drawing cash flow charts.
Suppose I develop a new carbonated beverage that has Pomegranate, Orange, Watermelon, Strawberry, and Apple juice. I trademark the name POWSA (to rhyme with YOWSA for an intended marketing campaign about how deliciously refreshing it is... POWSA!!). Then I perfect the tastiest ingredient mix with the essential acronym aligned components... POWSA!! I believe it is possible to get a $10 million annual SOM by selling 10 million cans at $1 each while the cost (at that scale of operation) will be sixty cents per can. However, I need to invest $20 million in the marketing, so I need a VC or angel investor to buy an equity stake for $20 million. I pitch the idea of getting Sugar Ray Leonard to do the ads for that "light-weight-sugar champion" POWSA Punch element of the marketing campaign. I claim the ad campaign with Sugar Ray would be effective with the $20 million budget. Now suppose Warren Buffet agrees with all my numbers and also has a 10% opportunity cost of capital (he believes the $20…
Two married couples of investors are analyzing a project where they acquired the following figures: initial investment $310,000 annual net profit of $130,000 each year for five years; salvage value of assets at the end of the fifth year $160,000. The money contributions for the initial investment were shareholders: 60% MARR 43%, bank A 20%, interest charged by the bank 45%; bank B 20% of the investment and an interest rate for the loan of 49%. Calculate the mixed MARR and determine the economic convenience of the investment by the NPV
Viva sells its waterproof phone case for $118 per unit. Fixed costs total $232,000, and variable costs are $53 per unit. (1) Determine the contribution margin ratio. per unit Contribution margin Contribution Margin Ratio Numerator: Denominator: Contribution Margin Ratio Contribution margin ratio %3D (2) Determine the break-even point in dollars. Numerator: Denominator: Break-Even Point in Dollars Break-even point in dollars %3D
Solve the following problems: 1. In order to build a new warehouse facility, the regional distributor for Valco Multi-Position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after 2 years, what was (a) the amount of the payment, and (b) the amount of interest? 2. A sum of $2 million now is equivalent to $2.42 million 1 year from now at what interest rate? 3. In order to restructure some of its debt, General Motors decided to pay off one of its short-term loans. If the company borrowed the money 1 year ago at an interest rate of 8% per year and the total cost of repaying the loan was $82 million, what was the amount of the original loan? 4. How many years would it take for an investment of $280,000 to cumulate to at least $425,000 at 15% per year interest? 5. Valtro Electronic Systems, Inc. set aside a lump sum of money 4 years ago in order to finance a plan expansion now. If the money was invested in a 10% per year simple…
Why do most of the engineers and financial managers prefer rate-of-return analysis to the PW method?
For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. NO EXCEL An engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $200,000 to buy and $80,000 per year to operate. Belts will be replaced one time per year at a cost of $5,500. Centrifuges will cost $400,000 to buy and $120,000 per year to operate, but because the centrifuge will produce a thicker cake, the sludge hauling cost to the monofill will be $30,000 per year less than for the belt presses. The useful lives are 5 and 10 years for BFP and the Centrifuge respectively. The salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. The interest rate is 8%. Use the PW method to select the more economical process.
How is the decision procedure used when comparing two or more mutually exclusive projects on the basis of the rate-of-return measure?
In order for a higher-cost alternative to be attractive, the incremental rate of return must be__________________.A. Greater than MARRB. Less than or equal to MARRC. Less than MARRD. Greater than or equal to MARR