Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $129,500.Project 2 requires an initial investment of $95,40Q. Assume the company requires a 10% rate of return on its investments.Annual AnountsSales of new productExpensesHaterials, labor, and overhead (except dapreciation)Depreciation-MachinerySelling, general, and administrative expensesProject 2$ 81,000Project 1$ 103,50068,90018,500,48033,92019,08021,200$ 6,800Income$7,620Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presentvalues should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearestwhole dollar.)Present ValueNet Cash Flowsx of Annulty at10%Present Value ofNet Cash FlowsProject 1Years 1-7Net present valuePresent Valueof Annulty at10%Project 2Present Value ofNet Cash FlowsNet Cash Flowrs xYears 1-5Net present value

Capital budgeting is the process by which a corporation examines potential large projects or…

Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value

Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 14E

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