1) | OFFICE EXPANSION: | ||
NPV = -490000+125000*4.11141 = | $ 23,926.25 | ||
SERVERS: | |||
NPV = -490000+165000*3.03735 = | $ 11,162.75 | ||
2) | OFFICE EXPANSION: | ||
NPV = -490000+125000*3.03735+180000*0.63552 = | $ 4,062.35 | ||
SERVERS: | |||
NPV = -490000+165000*3.03735 = | $ 11,162.75 | ||
3) | Evaluated on a 4 year life basis, the project SERVERS has higher NPV | ||
and is hence preferable. |
PR 25-5A Alternative capital investments Obj. 3, 4 projects, office expansion and The investment committee of...
PR 26-5A Alternative capital investments OBJ. 3, 4 1. Server upgrade, The investment committee of Sentry Insurance Co. is evilfferent usef $11,105 office ex- project pansion and upgrade to computer servers. The projects lives, ful each requires an investment of $490,000. The estimated net cash are as follows: flows from 1305 Chapter 26 Capital Investment Analysis Net Cash Flows Office Expansion Servers $125,000 $16000 25,000 165,000 165,000 125,000 125,000 125,000 The committee has selected a rte of 12% for purposes...
Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Net Cash Flows Year Office Expansion Servers 1 $125,000 $165,000 2 125,000 165,000 3 125,000 165,000 4 125,000 165,000 5 125,000 6 125,000 The committee has selected a rate of 12% for purposes of net...
The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Net Cash Flows Year Office Expansion Servers 1 $125,000 $165,000 2 125,000 165,000 3 125,000 165,000 4 125,000 165,000 5 125,000 6 125,000 The committee has selected a rate of 12% for purposes of net present value analysis....
Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $1,281,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server $336,000 $444,000 444,000 444,000 336,000 336,000 336,000 336,000 336,000 444,000 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates...
Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $1,343,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server 1 $338,000 $446,000 2 338,000 446,000 3 338,000 446,000 4 338,000 446,000 5 338,000 6 338,000 The committee has selected a rate of 10% for purposes...
Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $1,310,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server 1 $366,000 $483,000 2 366,000 483,000 3 366,000 483,000 4 366,000 483,000 5 366,000 6 366,000 The committee has selected a rate of 15% for purposes...
Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $1,428,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server 1 $375,000 $495,000 2 375,000 495,000 3 375,000 495,000 4 375,000 495,000 5 375,000 6 375,000 The committee has selected a rate of 12% for purposes...
Alternative Capital Investments Alternative Capital Investments The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $1,290,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server $339,000 339,000 339,000 339,000 339,000 339,000 $447,000 447,000 447,000 447,000 The committee has selected a rate of 12% for purposes of net present value analysis....
The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $870,000. The estimated net cash flows from each project are as follows: Net Cash Flow Year Office Expansion Server 1 $219,000 $289,000 2 219,000 289,000 3 219,000 289,000 4 219,000 289,000 5 219,000 6 219,000 The committee has selected a rate of 10% for purposes of net present...
The capital investment committee of Russell Transport and Storage Inc. is c cash flows from the investment is as follows: and net WAREHOUSE YEAR 61,400 51,400 36,400 26,400 ー3.600 $179.200 $135,000 125,000 110,000 00,000 TOTAL The project requires an investment of $368,000. Straight-line depreciation will be used, and a residual value of $18,000 is expected. The committee has selected a rate of 12% for purposes of the net present value analy Instructions 1. 2. 3. The Cash Payback Period Average...