Present Value of Annuity of $1Periods1%2%3%4%5%6%8%10%12%14%16%18%20%Period 1Period 2Period 3Period 4Period 50.980 0.971 0.962 0952 0.943 0.926 0.909 0.8931.942 1.913 1.886 1859 1.833 1.783 1.736 1.6902.884 2.829 2.775 2.723 2.673 2.577 2.487 2.4023.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.9144.713 4.580 4.4520.9900.8770.8620.8470.8331.9701.6471.6051.5661.5282.9412.3222.2462.1742.1063.9022.7982.6902.5894.8534.329 4212 3.993 3.791 3.6053.4333.2743.1272.991Period 6Period 7Period 8Period 9Period 10 9.4715.7955.601 5.417 5.2425.076 4.917 4.623 4.355 4.1116.472 6.230 6.002 5.786 5.582 5.206 4.868 4.5646.210 5.747 5.335 4.9686.247 5.759 5.3287722 7.360 6.710 6.145 5.6503.8893.6853.4983.3266.7284.2884.0393.8123.6057.652 7.325 7.020 6.733 6.4638.162 7786 7 4358.983 8.530 8.1114.6394.3444.0783.8378.5667.108 6.8024.9464.6074.3034.0315.2164.8334.4944.192Period 11 10.368 9.787 9.253 8.760Period 12 11.255 10.575 9.954 9.385Period 13 12.134 11.348 10.635 9.986 9.394Period 14 13.004 12.106 11.296 10.563 9.899Period 15 13.865 12.849 11.938 11.118 10.380 9.7128.306 7 887 7.139 6.495 59387536 6.814 6.1947 904 7 103 6 4248.244 7.367 6.6288.559 7.606 6.8115.4535.0294.6564.3278.8638.3848.8535.6605.1974.7934.4395.8425.3424.9104.5339.2956.0025.4685.0084.6116.1425.5755.0924.675Period 20 18.046 16.351 14.877 13.590 12.462 11 470 9.818 8.514Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077| 7.843Period 30 25.808 22.396 19.600 17 292 15.372 13.765 11.258 9.427 8.055Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.2447.4696.6235 9295.3534.8706.8736.0975.4674.9487.0036.1775.5174.9797.1056.2335.5484.997PrintDone E12-29A (similar to)Question HelpUse the NPV method to determine whether Juda Products should invest in the following projects:Project A costs $260,000 and offers seven annual net cash inflows of $59,000. Juda Products requires an annual returnof 12% on projects like A.Project B costs $380,000 and offers nine annual net cash inflows of $73,000. Juda Products demands an annual return of14% on investments of this nature.(Click the icon to view the present value annuity table.)(Click the icon to view the present value table.)(Click the icon to view the future value annuity table.)(Click the icon to view the future value table.)RequirementWhat is the NPV of each project? What is the maximum acceptable price to pay for each project?Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign fornegative net present values.)leThe NPV of Project A is5)5)n: ManeserveEnter any number in the edit fields and then click Check Answer.3 partsremainingClear AllCheck AnswerAIlrights

Project A, PV of cash inflows=Cash inflows×PV factor=$59,000×4.564=$269,276

Use the NPV method to determine whether Juda Products should invest in the following projects: Project A costs $260,000 and offers seven annual net cash inflows of $59,000. Juda Products requires an annual return of 12% on projects like A. • Project B costs $380,000 and offers nine annual net cash inflows of $73,000. Juda Products demands an annual return of 14% on investments of this nature. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) =(Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is 5)

Use the NPV method to determine whether Juda Products should invest in the following projects: Project A costs $260,000 and offers seven annual net cash inflows of $59,000. Juda Products requires an annual return of 12% on projects like A. • Project B costs $380,000 and offers nine annual net cash inflows of $73,000. Juda Products demands an annual return of 14% on investments of this nature. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) =(Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is 5)

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 2PA

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Similar questions

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year’s capital budget. The projects are independent. The cash outlay for the truck is $17,100, and that for the pulley system is $22,430. The firm’s cost of capital is 14%. After-tax cash flows, including depreciation, are as follows: Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each.