ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup...
ildhorseCompany is considering two capital investment proposals. Estimates regarding each project are provided below:
| Project Soup | Project Nuts | |
| Initial investment | $340000 | $420000 |
| Annual net income | 30000 | 46000 |
| Net annual cash inflow | 110000 | 146000 |
| Estimated useful life | 5 years | 6 years |
| Salvage value | 0 | 0 |
The company requires a 10% rate of return on all new
investments.
| Present Value of an Annuity of 1 | ||||
| Periods | 9% | 10% | 11% | 12% |
| 5 | 3.89 | 3.791 | 3.696 | 3.605 |
| 6 | 4.486 | 4.355 | 4.231 | 4.111 |
The net present value for Project Nuts is
$260206.
$70000.
$635830.
$215830.
q44
Homework Answers
Net present value for project Nuts = Present value of cash inflow-Present value of cash outflow
= (146000*4.355)-420000
Net present value for project Nuts = 215830
So answer is d) $215830
Add Answer to:
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Multiple Choice Question 114 CullumberCompany is considering two capital investment proposals. Estimates regarding each project are...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $ 724...
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Net Present Value—Unequal Lives Project 1 requires an original investment of $79,500. The project will yield cash flows of $11,000 per year for 9 years. Project 2 has a computed net present value of $21,200 over a seven-year life. Project 1 could be sold at the end of seven years for a price of $57,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Year...
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The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Radio Station TV Station 1 $420,000 $880,000 2 420,000 880,000 3 420,000 880,000 4 420,000 880,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589...
Multiple Choice Question 114
CullumberCompany is considering two capital investment
proposals. Estimates regarding each project are provided
below:
Project Soup
Project Nuts
Initial investment
$200000
$400000
Annual net income
16000
46000
Net annual cash inflow
60000
97000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new
investments.
Present Value of an
Annuity of 1
Periods
9%
10%
11%
12%
5
3.89
3.791
3.696
3.605
6
4.486
4.355...
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