McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost$523,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flowsby $72,100. Project B will cost $358,000, has an expected useful life of 12 years, a salvage value of zero, and is expected toincrease net annual cash flows by $50,400. A discount rate of 7% is appropriate for both projects. Click here to view PVtable.Compute the net present value and profitability index of each project. (If the net present value is negative, use either anegative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed inthe factor table provided.)Net present value - Project AProfitability index - Project ANet present value - Project B$Profitability index - Project B

Net present value : it is the difference between present value of cash inflows to the initial…

Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A 2$ Profitability index - Project A Net present value - Project B $ Profitability index - Project B

Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A 2$ Profitability index - Project A Net present value - Project B $ Profitability index - Project B

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 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...

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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?
Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $523,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $72,100. Project B will cost $324,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,400. A discount rate of 7% is appropriate for both projects. Click here to view the factor table. Compute the net present value and profitability index of each proiect." Net present... Villav Net present value- Project B $ Profitability index - Project B 42312 1.12
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $450,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $73,500. Project B will cost $274,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,800. A discount rate of 9% is appropriate for both projects. Click here to view the factor table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A $ Profitability index- Project A Net present value - Project…
McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $430,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,500. Project B will cost $265,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $45,000. A discount rate of 9% is appropriate for both projects. Click here to view the factor table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value- Project A Profitability index - Project A Net present value- Project B…
Jonczyk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $461,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $72,000. Project B will cost $271,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $45,000. A discount rate of 8% is appropriate for both projects. 1. What is the net present value $ of project A? 2. what is the profitability index for project A? 3. What is the net present value $ of project B? 4. what is the profitability index for project B?
Tamarisk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $537,000, has an expected useful life of 15 years and a salvage value of zero, and is expected to increase net annual cash flows by $69,000. Project B will cost $351,000, has an expected useful life of 15 years and a salvage value of zero, and is expected to increase net annual cash flows by $47,000. A discount rate of 8% is appropriate for both projects. Calculate the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.52. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124.) Net present value Profitability index $ Project A $ Project B
Wildhorse Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $435,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $74,600. Project B will cost $253,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $45,200. A discount rate of 10% is appropriate for both projects. Click here to view PV table.Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A $enter the number rounded to 2 decimal places…
Blossom Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $450,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $73,500. Project B will cost $298,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $50,200. A discount rate of 9% is appropriate for both projects. Click here to view PV table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A Profitability index - Project A Net present value - Project B…
Carla Vista Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $509,000, has an expected useful life of 12 years and a salvage value of zero, and is expected to increase net annual cash flows by $74,100. Project B will cost $342,000, has an expected useful life of 12 years and a salvage value of zero, and is expected to increase net annual cash flows by $50,700. A discount rate of 8% is appropriate for both projects. Click here to view the factor table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value - Project A $ Profitability index - Project A Net present value…
Blossom Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $454,000, has an expected useful life of 13 years and a salvage value of zero, and is expected to increase net annual cash flows by $68,000. Project B will cost $300,000, has an expected useful life of 13 years and a salvage value of zero, and is expected to increase net annual cash flows by $47,000. A discount rate of 9% is appropriate for both projects.
Quorex is evaluating two mutually exclusive projects. Project A has a net investment of $48,000 and net cash flows over a six-year period of $12,500 per year (that is reinvestment with the same cost and cash flow for another six years). Project B also has a net investment of $48,000, but its net cash flows of $8,640 per year will occur over a 12-year period. If Quorex has a cost of capital of 14% for these projects, which project, if either, should be chosen, and what is its NPV?