SdSubject: acounting BDokintrencesInformation for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400.Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EVof $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.)Annual AmountsSales of new productExpensesMaterials, labor, and overhead (except depreciation)Depreciation MachinerySelling, general, and administrative expensesIncomeYears 1-7Project 1Net present valueYears 1-5Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2 (Negative net presentvalues should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearestwhole dollar.)Project 2Net present valueNet Cash Flows XNet Cash Flows xPresent Valueof Annuity at10%Project 1$ 100,800Present Valueof Annuity at10%66,95018,2008,240$7,410Present Value ofNet Cash FlowsSProject 2$ 78,600Present Value ofNet Cash Flows532,96018,54020,600$6,500

The TVM states that the value of money changes with time, for example, $10 received today has more…

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400. Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net Cash Flows x Project 1 $ 100,800 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2 (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar) Present Value of Annuity at 10% 66,950 18,200 8,240 $ 7,410 Project 2 $ 28,600 Present Value of Net Cash Flows $ 32,960 18,540 20,600 $6,500

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400. Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net Cash Flows x Project 1 $ 100,800 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2 (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar) Present Value of Annuity at 10% 66,950 18,200 8,240 $ 7,410 Project 2 $ 28,600 Present Value of Net Cash Flows $ 32,960 18,540 20,600 $6,500

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 1PA: Average rate of return method, net present value method, and analysis for a service company The...

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