Chapter 9 Question 7Please help me with finding an answer and provide a full explanation. View PoliciesCurrent Attempt in ProgressMichael Jones is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life. Michael usesa 12% discount rate.Option 1Option 2Equipment purchase and installation$71,700$82,540Annual cash flow$28,200$30,690Equipment overhaul in year 6$4,750Equipment overhaul in year 8$6,060Click here to view the factor table.(a)Calculate the net present value of the two opportunities. (Round present value factor calculations to 4 decimal places, e.g. 1.2514and the final answers to 0 decimal places, e.g. 59,991.)Option 1Option 22$Net present value$%24 APPENDIX 9.1 Present value of $1 received in n periods.Periods4%5%6%7%8%9%10%11%12%13%14%16%18%20%10.96150.95240.9434 0.9346 0.9259 0.91740.9091 0.9009 0.8929 0.88500.87720.8621 0.84750.83330.92460.90700.89000.87340.8573 0.84170.8264 0.8116 0.7972 0.78310.76950.7432 0.71820.694430.88900.86380.83960.81630.79380.77220.7513 0.7312 0.7118 0.69310.67500.64070.60860.578740.85480.82270.79210.7629 0.73500.70840.6830 0.6587 0.6355 0.61330.59210.55230.5158 0.48230.82190.78350.7473 0.7130 0.6806 0.64990.6209 0.5935 0.56740.54280.51940.4761 0.43710.40196.0.79030.74620.70500.66630.63020.59630.56450.53460.50660.48030.45560.41040.37040.334970.75990.71070.66510.62270.58350.54700.51320.48170.45230.42510.39960.35380.31390.27910.73070.67680.62740.58200.54030.5019 0.46650.43390.40390.37620.35060.30500.26600.23260.70260.64460.59190.54390.50020.46040.42410.39090.36060.33290.30750.26300.22550.1938100.67560.61390.55840.50830.46320.42240.38550.35220.32200.29460.26970.22670.19110.1615110.64960.58470.52680.47510.42890.3875 0.3505 0.3173 0.28750.26070.23660.19540.16190.1346120.62460.55680.49700.44400.39710.3555 0.3186 0.2858 0.25670.23070.2076 0.1685 0.1372 0.1122130.60060.53030.46880.41500.36770.3262 0.2897 0.2575 0.2292 0.20420.18210.1452 0.11630.0935140.57750.50510.44230.38780.34050.29920.26330.23200.20460.18070.1597 0.12520.09850.0779150.55530.48100.41730.3624 0.31520.2745 0.23940.20900.18270.15990.14010.1079 0.0835 0.0649160.53390.45810.39360.33870.29190.2519 0.21760.18830.16310.14150.1229 0.0930 0.0708 0.0541170.51340.43630.37140.31660.27030.2311 0.19780.16960.1456 0.1252 0.1078 0.0802 0.06000.0451180.49360.41550.35030.29590.25020.2120 0.17990.15280.13000.11080.09460.06910.05080.0376190.47460.39570.33050.2765 0.23170.1945 0.1635 0.13770.11610.09810.0829 0.0596 0.0431 0.0313200.45640.37690.31180.25840.21450.1784 0.14860.12400.10370.08680.07280.05140.03650.0261$1PVn.(1+ i)"

Answer a) Calculation of Net Present Value of Option 1 Net Present value = Present value of cash…

Michael Jones is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life. Michael uses a 12% discount rate. Option 1 Option 2 $71,700 $28,200 Equipment purchase and installation $82,540 Annual cash flow $30,690 Equipment overhaul in year 6 $4,750 Equipment overhaul in year 8 $6,060 Click here to view the factor table. (a) Calculate the net present value of the two opportunities. (Round present value factor calculations to 4 decimal places, e.g. 1.2514 and the final answers to 0 decimal places, e.g. 59,991.) Option 1 Option 2 Net present value %24

Michael Jones is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life. Michael uses a 12% discount rate. Option 1 Option 2 $71,700 $28,200 Equipment purchase and installation $82,540 Annual cash flow $30,690 Equipment overhaul in year 6 $4,750 Equipment overhaul in year 8 $6,060 Click here to view the factor table. (a) Calculate the net present value of the two opportunities. (Round present value factor calculations to 4 decimal places, e.g. 1.2514 and the final answers to 0 decimal places, e.g. 59,991.) Option 1 Option 2 Net present value %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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