For each mutiple choice question, choose the BEST answer Aipa Inc onily has reso

Question

For each mutiple choice question, choose the BEST answer Aipa Inc onily has resources to run one capital project this year Considerte floog ndchoose which ofthe four projects should be approved. Project Z S125 million Project X $150 milion $100 million 14% 17 month Project Y 575 million S85 million 5300 mi 5300 miion million 19% 12 months 10 months hich ject shoud he appoved BaCein gunchaing apiece o oquigment for $300,000. There are delivery costs of $20,.000 atoc of 5300 and the se of the equipment will requitre employec training costs of a.cl a." men ry of peciallharts ooting $25,000 Ther tax rate is 40% the machine wil h dcined ng ightdepeeciation over 30 years What is the initial 75 425

Explanation / Answer

1)

Since Project W & Project X has NPV of $ 100 million which are the highest, one of these two should be chosen.

As Project W has lesser initial investment and higher IRR, Project W should be approved.

Correct answer is (A)

2)

Correct answer is (D) $425,000

Parameters Value Purchase cost $       3,00,000 Delivery cost $           20,000 Installation cost $           30,000 Traning Cost $           50,000 Inventory cost $           25,000 Total $       4,25,000

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