Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Investment XInvestment YYear 1₱ 1,000,000₱ 4,000,000Year 22,000,0003,000,000Year 33,000,0002,000,000Year 44,000,0001,000,000Total₱ 10,000,000₱ 10,000,000 Required: Compute the present value of the cash inflows for each investment using a 20% discount rate. Just use the NPV formula available in Excel (i.e., =NPV,rate,value1,value2,value3,value4), following the format prescribed during the synchronous class. Don't use the PV formula anymore, as this will not yield the same result.

Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 21BEA

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Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment.

	Investment X	Investment Y
Year 1	₱ 1,000,000	₱ 4,000,000
Year 2	2,000,000	3,000,000
Year 3	3,000,000	2,000,000
Year 4	4,000,000	1,000,000
Total	₱ 10,000,000	₱ 10,000,000

Required: Compute the present value of the cash inflows for each investment using a 20% discount rate. Just use the NPV formula available in Excel (i.e., =NPV,rate,value1,value2,value3,value4), following the format prescribed during the synchronous class. Don't use the PV formula anymore, as this will not yield the same result.

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