Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $330,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 46,000 142,000 202,000 $ 390,000 Project C2 $ 130,000 130,000 130,000 $ 390,000 a. The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 8% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Project C1 Net Cash Flows X Present Value of 1 at 8% Year 1 Year 2 Year 3 Totals Present Value Project C2 Net Cash Flows X of 1 at 8% Year 1 Year 2 Year 3 Totals Which projects, if any, should be accepted Present Value of Net Cash Flows ။ 11 = IF Present Value of Net Cash Flows
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $330,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 46,000 142,000 202,000 $ 390,000 Project C2 $ 130,000 130,000 130,000 $ 390,000 a. The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 8% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Project C1 Net Cash Flows X Present Value of 1 at 8% Year 1 Year 2 Year 3 Totals Present Value Project C2 Net Cash Flows X of 1 at 8% Year 1 Year 2 Year 3 Totals Which projects, if any, should be accepted Present Value of Net Cash Flows ။ 11 = IF Present Value of Net Cash Flows
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 3CMA
Related questions
Question
Please fill in this chart
![Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $330,000 and would yield the
following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Net cash flows
Year 1
Year 2
Year 3
Totals
Project C1
$ 46,000
142,000
202,000
$ 390,000
Project C2
$ 130,000
130,000
130,000
$ 390,000
a. The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B
to determine which projects, if any, should be accepted.
b. Using the answer from part a, is the internal rate of return higher or lower than 8% for (i) Project C1 and (ii) Project C2? Hint: It is
not necessary to compute IRR to answer this question.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e8d4de1-1986-435d-9868-a5cba9cd1825%2F469bfb2d-a9d9-494f-a8e8-a2a2754224a9%2Fz5v6j7b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $330,000 and would yield the
following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Net cash flows
Year 1
Year 2
Year 3
Totals
Project C1
$ 46,000
142,000
202,000
$ 390,000
Project C2
$ 130,000
130,000
130,000
$ 390,000
a. The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B
to determine which projects, if any, should be accepted.
b. Using the answer from part a, is the internal rate of return higher or lower than 8% for (i) Project C1 and (ii) Project C2? Hint: It is
not necessary to compute IRR to answer this question.
![Project C1
Net Cash Flows
X
Present Value
of 1 at 8%
Year 1
Year 2
Year 3
Totals
Present Value
Project C2
Net Cash Flows
X
of 1 at 8%
Year 1
Year 2
Year 3
Totals
Which projects, if any, should be accepted
Present Value of
Net Cash Flows
။
11
=
IF
Present Value of
Net Cash Flows](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e8d4de1-1986-435d-9868-a5cba9cd1825%2F469bfb2d-a9d9-494f-a8e8-a2a2754224a9%2Fczxi4bv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Project C1
Net Cash Flows
X
Present Value
of 1 at 8%
Year 1
Year 2
Year 3
Totals
Present Value
Project C2
Net Cash Flows
X
of 1 at 8%
Year 1
Year 2
Year 3
Totals
Which projects, if any, should be accepted
Present Value of
Net Cash Flows
။
11
=
IF
Present Value of
Net Cash Flows
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT