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The following capital expenditure projects have been proposed for managements consideration at Scott Inc. for the upcoming b

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Answer #1
Project ABCE should be selected

Detail working for our easy understanding

Year PVF Project B Project D Project C' Project E'
A Cash Flow
B
PV
AXB
Cash Flow
C
PV
AXC
Cash Flow
D
PV
AXC
Cash Flow
C
PV
AXC
Initial investment 0 1 -$68,000 -$68,000 -$172,000 -$172,000 -$154,000 -$154,000 -$344,000 -$344,000
Net cash return 1 0.8772 $0 $0 $17,200 $15,088 $57,000 $50,000 $105,000 $92,106
2 0.7695 $0 $0 $34,400 $26,471 $57,000 $43,862 $105,000 $80,798
3 0.675 $36,000 $24,300 $51,600 $34,830 $57,000 $38,475 $60,000 $40,500
4 0.5921 $36,000 $21,316 $68,800 $40,736 $57,000 $33,750 $60,000 $35,526
5 0.5194 $36,000 $18,698 $86,000 $44,668 $57,000 $29,606 $60,000 $31,164
6 0.4556 $21,000 $9,568 $0 $0 $0 $0 $60,000 $27,336
7 0.3996 $21,000 $8,392 $0 $0 $0 $0 $60,000 $23,976
8 0.3506 $21,000 $7,363 $0 $0 $0 $0 $60,000 $21,036
9 0.3075 $21,000 $6,458 $0 $0 $0 $0 $60,000 $18,450
10 0.2697 $21,000 $5,664 $0 $0 $0 $0 $60,000 $16,182
NPV $33,757 -$10,206 $41,692 $43,074
Present value ratio 0.50 0.06 0.27 0.13
Ranking on Base on NPV
Project Investment NPV Rank
A $68,000 $6,538 IV
B $75,000 $33,757 III
C $154,000 $41,692 II
D $172,000 -$10,206
E $344,000 $43,074 I
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