918/29, 9.04 AM ‘Simulation | CPA Task 1 Scenario 1 A B c 1 Project NPV Rank 2 Project sieges 2 @ 3 Project2 $7910.00 3 4 Projects sige7.00@ 1 @ 5 Projects s3asa4 5 6 Projects $376.14 4 & Task 2 Scenario 2 A 8 ¢ D Profitability Project Index Rank Pursue 2 Project 1 128 ® 1 @ ves @ 3 Project 2 16 B 4 @ nw B 4 Project 3 12 @ 2 @ vs B 5 Project 4 wie @) 3 B no B 6 Project 5 13 @) 5 B nw B Task3 Payback Period A B Payback Period Project (in years) 2 Project 1 3.33 o 3 Project 2 3.27 4 Project3 3.44 Q 5 Project 4 422 @ 6 Project 5 3.87 @ htpsscpa becker com/medule/B-02-08/V4.1isimisession918/28, 904 AM ‘Simulation | CPA NPV: 16,865.40; Rank 2. [-60,000 + (18,000 x 4.2703)] = 16,865.40 NPV: 7,910.80; Rank 3. [-49,000 + (12,000 » 0.9524) + (14,000 x 0,9070) + (17,000 x 0.8638) + (22,000 x 0,8227)] = 7,910.80 NPV: 18,879.00; Rank 1. [-78,000 + (20,000 x 0.9434) + (23,500 x 0.8900) + (24,000 x 0.8396) + (24,000 x 0.7921) + (24,000 x 0.7473)] = 18,879.00 NPV: 3,434.44; Rank 5. [-19,000 + (3,000 x 0.9346) + (4,500 x 0.8734) + (4,800 x 0.8163) + (5,500 x 0.7629) + (5,500 x 0.7130) + (5,500 x 0.6663)] = 3,434.44 NPV: 3,761.14; Rank 4. [-28,000 + (3,500 x 09390) + (6,000 x 0.8817) + (9,800 x 0.8278) + (10,000 x 0.7773) + (10,000 x 0.7299)] = 3,761.14 Profitability index: 1.28; Rank 1; Yes. (18,000 x 4.2703) + 60,000 = 1.28. With $150,000 in capital available, this project should be pursued. Profitability index: 1.16; Rank 4; No. [(12,000 x 0.9524) + (14,000 x 0.9070) + (17,000 x 0.8638) + (22,000 x 0.8227)] + 49,000 = 1.16. There will not be enough money given the $150,000 capital budget to pursue this project. Profitability index: 1.24; Rank 2; Yes. {(20,000 x 0.9434) + (23,500 x 0,8900) + (24,000 x 0.8396) + (24,000 x 0.7921) + (24,000 x 0.7473)] + 78,000 = 1.24. With $150,000 available, as the second-ranked project, this should be pursued. Profitability index: 1.18; Rank 3; No. [(3,000 x 0.9346) + (4,500 x 0.8734) + (4,800 * 0.8163) + (8,500 x 0.7629) + (5,500 x 0.7130) + (5,500 * 0.6663)] + 19,000 = 1.18. There will not be enough money given the $150,000 capital budget to pursue this project. Profitability index: 1.13; Rank 5; No. {(3,500 x 0.9390) + (6,000 x 0.8817) + (9,800 x 0.8278) + (10,000 x 0.7773) + (10,000 x 0.7299)] + 28,000 = 1.13. There will not be enough money given the $150,000 capital budget to pursue this project. 3.33 years. Since the cash flows are all the same, the payback period can be calculated as 60,000 = 18,000 = 3.33 years. 3.27 years. The cash flows from Years 1-3 total 43,000 (12,000 + 14,000 + 17,000). Since the initial investment is 49,000, another 6,000 out of the 22,000 cash flow for Year 4 is needed. 3 years + (6,000 + 22,000) = 3.27 years. 3.44 years. The cash flows from Years 1-3 total 67,500 (20,000 + 23,500 + 24,000). Since the initial investment is 67,500, another 10,500 out of the 24,000 cash flow for Year 4 is needed. 3 years htpsscpa becker com/medule/B-02-08/V4.1isimisession 29‘98723, 908 am + (10,500 + 24,000) = 3.44 years, ‘Simulation | CPA 4.22 years. The cash flows from Years 1-4 total 17,800 (3,000 + 4,500 + 4,800 + 5,500). Since the initial investment is 19,000, another 1,200 out of the 5,500 cash flow for Year 5 is needed. 4 years + (1,200 = 5,500) = 4.22 years. 3.87 years. The cash flows from Years 1-3 total 19,300 (3,500 + 6,000 + 9,800). Since the initial investrnent is 28,000, another 8,700 out of the 10,000 cash flow for Year 4 is needed, 3 years + (8,700 + 10,000) = 3.87 years. htpsscpa becker com/medule/B-02-08/V4.1isimisession a