Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for addition
food service, The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this proje
is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, use the NPV to determine which project Singin
Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change?
If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion?
$ 281272.71 (Round to the nearest cent.)
If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section?
$ 252,959.30 (Round to the nearest cent.)
V project. (Select from the drop-down menu.)
Based on the NPV, Singing Fish Fine Foods should pick the
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Transcribed Image Text:P9-12 (similar to) E Question Help NPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for addition food service, The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this proje is $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, use the NPV to determine which project Singin Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $ 281272.71 (Round to the nearest cent.) If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section? $ 252,959.30 (Round to the nearest cent.) V project. (Select from the drop-down menu.) Based on the NPV, Singing Fish Fine Foods should pick the
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