Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Topic Video
Question

s

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,700.
Project 2 requires an initial investment of $100,800. Assume the company requires a 10% rate of return on its investments. (PV of $1.
EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided.)
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Income
Years 1-7
Project 1
Net present value
Years 1-5
Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present
values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest
whole dollar.)
Project 2
Net present value
Net Cash Flows
Net Cash Flows x
Present Value
of Annuity at
10%
Project 1
$ 108,900
Present Value
of Annuity at
10%
72,800
19,100
8,960
$ 8,040
Present Value of
Net Cash Flows
Project 2
$ 85,800
Present Value of
Net Cash Flows
35,840
20,160
22,400
$ 7,400
expand button
Transcribed Image Text:Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,700. Project 2 requires an initial investment of $100,800. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net present value Years 1-5 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 2 Net present value Net Cash Flows Net Cash Flows x Present Value of Annuity at 10% Project 1 $ 108,900 Present Value of Annuity at 10% 72,800 19,100 8,960 $ 8,040 Present Value of Net Cash Flows Project 2 $ 85,800 Present Value of Net Cash Flows 35,840 20,160 22,400 $ 7,400
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Finance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education