Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return oninvestments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1)Note: Use appropriate factor(s) from the tables provided.YearInitial investment1.2.3.Required A Required Ba. Compute payback period for each project. Based on payback period, which project is preferred?b. Compute net present value for each project. Based on net present value, which project is preferred?Complete this question by entering your answers in the tabs below.Net Cash Flows$Project 1$(42,000)10,50027,80018,500Compute payback period for each project. Based on payback period, which project is preferred?Note: Cumulative net cash outflows must be entered with a minus sign. Do not round your intermediate calculations. Roundyour Payback Period answer to 2 decimal places.$$$Project 1Year 1Year 2Year 3TotalsInitial investmentNet present valueProject 2Year 1Year 2Year 3TotalsInitial investmentNet present valueBased on net present value, which project is preferred?Project 2$(78,000)35,00015,00035,000Net CashFlows10,50027,80018,50056,80035,00015,00035,00085,000Present ValueFactorPresent Value of NetCash FlowsSA$$$0000

a)From the given following data, we will calculate cumulative net cash flows in the tables below and…

Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year Initial investment 1. 2. 3. Net Cash Flows Project 1 $(42,000) 10,500 27,800 18,500 Project 2 $(78,000) 35,000 15,000 35,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred?

Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year Initial investment 1. 2. 3. Net Cash Flows Project 1 $(42,000) 10,500 27,800 18,500 Project 2 $(78,000) 35,000 15,000 35,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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