Reference no: EM131328611
Lundblad Construction Co. recently acquired ten acres of land and is weighing two options for developing the land. The first proposal is tobuild ten single-family homes on the site. This project would generate a quick cash payoff as the homes are sold over the next two years. Specifically, Lundblad estimates that it would spend $2.5 million on construction costs immediately, and it would receive $1.6 million as cash inflows in each of the next two years. The second proposal is to build a strip shopping mall.
This project calls for Lundblad to retain ownership of the property and to lease space for retail businesses that would serve the neighborhood. Construction costs for the strip mall are also about $2.5 million, and the company expects to receive $350,000 annually (for each of fifty years, starting one year from now) in net cash inflows from leasing the property. Lundblad's cost of capital is 10 percent.
a. Rank these projects based on their NPVs.
b. Rank these projects based on their IRRs.
c. Rank these projects based on their PIs. Do these rankings agree with those based on NPV or IRR ?
d. Draw NPV profiles for these projects on the same set of axes. Use this graph to explain why, in this case, the NPV and IRR methods yield mixed signals.
e. Which project should Lundblad choose?
f. Which project should Lundblad choose if its cost of capital is 13.5 percent? 16 percent? 20 percent?
|
Which pollution control program should wilkes select
: Wilkes, Inc., must invest in a pollution-control program in order to meet federal regulations to stay in business.- If the cost of capital for Wilkes is 15 percent, which pollution-control program should Wilkes select?
|
|
Rank the investments based on their pis
: Rank these investments based on their NPVs.- Rank these investments based on their IRRs.- Rank these investments based on their PIs.
|
|
Purpose of organizational behavior for the company
: Describe the strategic role and purpose of organizational behavior for the company selected in Week One. Identify the organizational factors of organizational behavior for the company selected in Week One
|
|
How the universal declaration of human rights is relevant
: Explain how the Universal Declaration of Human Rights (UDHR) is relevant to human services professionals in your area of interest.Explain changes that these human services professionals might need to make to ensure compliance with the UDHR.
|
|
Rank the projects based on their npvs
: Rank these projects based on their NPVs.- Rank these projects based on their IRRs.- Rank these projects based on their PIs. Do these rankings agree with those based on NPV or IRR ?
|
|
What tax year should the corporation choose
: "If the corporation could choose any tax year and pay the lawyer's salary at a time that would be most tax efficient. What tax year should the corporation choose and when should the salary be paid each year?"
|
|
Select one contributing factor to childhood or adult obesity
: Obesity in America is considered an epidemic. There are many contributing factors to obesity (both childhood and adult), such as biological, environmental, social, or economic factors.Describe the effect that obesity (childhood and / or adult) has ..
|
|
Find the relevant incremental cash flows
: Find the relevant incremental cash flows for years 0 through 6.- Using the cash flows found in part (a), determine the NPV and IRR for the proposed equipment purchase.
|
|
What is linguistic style
: What is linguistic "style," and what is the role of style in the construction of young people's identities, according to Bucholtz? (must be answered by the file I uploaded)(just 2 paragraphs)
|