You are a Financial Analyst with Challenger Ltd and the chief financial officer (CFO) requests you to evaluate two new capital budgeting proposals. Specifically, you are asked to provide a recommendation and also respond to a number of questions aimed at assessing your level of competence in capital budgeting process.

Instructions are as follows: Provide an evaluation of two proposed projects, both with identical initial outlays of $400,000. Both of these projects involve additions to a client’s highly successful product line. The required rate of return on both projects is set at 11%. The expected after-tax cash flows from each project are as presented in the table below.

In evaluating these projects, please respond to the following questions:

3. Distinguish between “required rate of return” and “internal rate of return”. Illustrate your answer with examples.

4. What is the payback period on each project? If Challenger Ltd imposes a 2.5-year maximum acceptable payback period, which of these projects should be accepted?

5. What are the main limitations of the pay back method of valuation. Despite these limitations, chief financial officers (CFOs) use it. Explain why.

6. Determine the NPV for each of these projects? Should the projects be accepted? Explain.

7. Determine the IRR for each of these projects? Should the projects be accepted? Explain.

8. Under what circumstances will the NPV and IRR offer different recommendations, and which recommendation is preferred? Carefully explain

9. How would you accommodate unequal lives of the project while determining the NPVs of the project? Demonstrate using calculations.

10. Explain why unequal lives of projects make NPVs of the projects incomparable.

11. Determine the profitability index for each of these projects? Should the projects be accepted? Explain. (5 marks)

Initial outlayInflow year 1Inflow year 2Inflow year 3Inflow year 4 Inflow year 5 Inflow year 6 PROJECT x$400,000$80,000$140,000$130,000 $160,000 PROJECT Y$400,000$160,000$160,000$160,000$160,000$160,000 $ 160,000

Need help with these questions:

Question 1

(TCO 6) To retrieve all fields from a table, use

SELECT ALL.

SELECT ANY.

SELECT ().

SELECT *.

Question 2

(TCO 6) Which operator would be most appropriate to determine the books in the categories of ‘COMPUTER’, ‘SPORTS’ and ‘FAMILY?’

LIKE

IN

BETWEEN

>

Question 3

(TCO 6) Which code returns the date field HIREDATE in the format: Friday, April 5th, 2015?

DATE_FORMAT(HIREDATE, ‘%W, %m %d, %Y’)

DATE_FORMAT(HIREDATE, ‘%a, %M %D, %Y’)

DATE_FORMAT(HIREDATE, ‘%W, %M %D, %Y’)

DATE_FORMAT(HIREDATE, ‘%a, %m %d, %y’)

Question 4

(TCO 6) Given a books table with fields for title, retail, and cost, which statement will correctly display the title of each book and the profit generated with a heading of Profit?

SELECT title, cost-retail as “Profit” FROM books;

SELECT title, retail – cost as “Profit” FROM books;

SELECT title, profit FROM books;

SELECT title, (retail – cost), FROM books;

Question 5

(TCO 8) Which update clause is optional?

SET

UPDATE

WHERE

FROM

Question 6

(TCO 6) Given a table orders with fields for orderid, orderdate, and shipdate, which query will display the ordered for only those orders that have shipped?

SELECT ordered FROM orders WHERE shipdate <> orderdate;

SELECT orderid FROM orders WHERE shipdate IS NOT NULL;

SELECT orderid FROM orders WHERE shipdate IS NULL;

SELECT orderid FROM orders;

Question 7

(TCO 6) Which WHERE clause will return data on all books with ‘JAVA’ anywhere in the title?

WHERE title LIKE ‘JAVA’

WHERE title LIKE ‘JAVA%’

WHERE title LIKE ‘%JAVA%’

WHERE title LIKE ‘%JAVA’

Question 8

(TCO 6) Given a books table with fields of title, cost, and retail, what if anything is wrong with the following query (assuming all fields exist)?

               SELECT * FROM books ORDER BY retail WHERE cost > 20;

You must sort and filter on the same field.

You cannot use ORDER BY and WHERE in the same query.

The ORDER BY clause must always be last.

Nothing is wrong.

Question 9

(TCO 8) Which function will convert a number to a character string with a specified number of decimal places?

FORMAT

DATE_FORMAT

NUMBER_FORMAT

FORMAT_NUMBER

Question 10

(TCO 6) Given a books table with fields: title, category (such as ‘SPORTS’), cost, retail; what condition will return books with a retail price under 30 in the ‘MYSTERY’ or ‘BIOGRAPHY’ categories?

WHERE retail < 30 AND category = ‘MYSTERY’ OR ‘BIOGRAPHY’

WHERE retail < 30 AND category = ‘MYSTERY’ OR category = ‘BIOGRAPHY’

WHERE retail < 30 AND (category = ‘MYSTERY’ OR category = ‘BIOGRAPHY’)

WHERE retail < 30 AND category IN ‘MYSTERY’ OR ‘BIOGRAPHY’