Consider the following EOY cash flows for two mutually exclusive alternatives (one must be chosen). The MARR is 4% per year.Lead AcidLithium lonCapital investmentAnnual expenses$7,000$2,25012 years$0$13,000$2,50018 years$2,600Useful lifeMarket value at end of useful lifeClick the icon to view the interest and annuity table for discrete compounding when i= 4% per year.Determine which alternative should be selected based on the PW method. Assume repeatability and use a study period of 36years.The PW of the Lead Acid is $ - 56600 . (Round to the nearest hundreds.)The PW of the Lithium lon is $65400. (Round to the nearest hundreds.)Which alternative should be selected? Choose the correct answer below.Lithium lonLead Acid

Net Present Worth: It is the present worth of the annual cash inflows and annual cash outflows…

Answered: Which alternative should be selected?…

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

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An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.

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