Net present value. Lepton Industries has three potential projects, all with an initial cost of $2,300,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept. Cash Flow Project Q Project R Project S Year 1 $600,000 $800,000 $1,200,000 Year 2 $600,000 $800,000 $1,000,000 Year 3 $600,000 $800,000 $800,000 Year 4 $600,000 $800,000 $600,000 Year 5 $600,000 $800,000 $400,000 Discount rate 9% 11% 16%
Net present value. Lepton Industries has three potential projects, all with an initial cost of $2,300,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept. Cash Flow Project Q Project R Project S Year 1 $600,000 $800,000 $1,200,000 Year 2 $600,000 $800,000 $1,000,000 Year 3 $600,000 $800,000 $800,000 Year 4 $600,000 $800,000 $600,000 Year 5 $600,000 $800,000 $400,000 Discount rate 9% 11% 16%
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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value.
Lepton Industries has three potential projects, all with an initial cost of
$2,300,000.
The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept.
Cash Flow
|
Project Q
|
Project R
|
Project S
|
|
||
Year 1
|
$600,000
|
|
$800,000
|
|
$1,200,000
|
|
Year 2
|
$600,000
|
|
$800,000
|
|
$1,000,000
|
|
Year 3
|
$600,000
|
|
$800,000
|
|
$800,000
|
|
Year 4
|
$600,000
|
|
$800,000
|
|
$600,000
|
|
Year 5
|
$600,000
|
|
$800,000
|
|
$400,000
|
|
Discount rate
|
9%
|
11%
|
16%
|
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