Swifty Corporation has decided to invest in renewable energy
sources to meet part of its energy needs for production. It is
considering solar power versus wind power. After considering cost
savings as well as incremental revenues from selling excess
electricity into the power grid, it has determined the
following.
Solar | Wind | |||
Present value of annual cash flows | $52,608 | $129,765 | ||
Initial investment | $38,400 | $105,500 |
Determine the net present value and profitability index of each
project. (If the net present
value is negative, use either a negative sign preceding the number
eg -45 or parentheses eg (45). Round present value answers to 0
decimal places, e.g. 125 and profitability index answers to 2
decimal places, e.g. 15.25.)
Solar | Wind | |||
Net present value | $
|
$
|
||
Profitability index |
|
|
Which energy source should it choose?
The company should choose
|
Swifty Corporation has decided to invest in renewable energy sources to meet part of its energy...
Ranger Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following. Click here to view PY table Solar Wind $132,950 Present value of annual cash flows Initial investment $52,380 $38,000 $104,300 Determine the net present value and profitability index of each project....
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $592,821, has an expected useful life of 15 years, a salvage value of zero, and is expected to increase net annual cash flows by $75,000. Project B will cost $396,957, has an expected useful life of 15 years, a salvage value of zero, and is expected to increase net annual cash flows by $51,400. A discount rate of 8% is appropriate for both projects. Click...
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $464,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $68,100. Project B will cost $342,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $50,900. A discount rate of 8% is appropriate for both projects. Click...
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $522,828, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $72,100. Project B will cost $324,141, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,400. A discount rate of 7 % is appropriate for both projects....
McKnight Company is considering two different, mutually
exclusive capital expenditure proposals. Project A will cost
$509,000, has an expected useful life of 12 years, a salvage value
of zero, and is expected to increase net annual cash flows by
$74,100. Project B will cost $342,000, has an expected useful life
of 12 years, a salvage value of zero, and is expected to increase
net annual cash flows by $50,700. A discount rate of 8% is
appropriate for both projects.
Compute...
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $400,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,000. Project B will cost $310,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $55,000. A discount rate of 9% is appropriate for both projects. Compute...
Vaughn Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $506,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $69,900. Project B will cost $314,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $45,200. A discount rate of 7% is appropriate for both projects. Click...
Brief Exercise 26-5 McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $450,241, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $73,500. Project B will cost $298,321, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $50,200. A discount rate of 9% is appropriate for...
Question 3 McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $542,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $74,500. Project B will cost $338,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $48,000. A discount rate of 7% is appropriate for both...
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Profect A will cost $508,824, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $74,100. Project B will cost $341,779, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $50,700. A discount rate of 8% is appropriate for both projects. Compute...