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Part B please

Part B please

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Part B please

Monty Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,200. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total AA (a) 10,000 $8,000 $10,900 $12,000 11,000 16,000 BB $34,000 $32,700 10,900 Click here to view PV tables. 10,900 Payback period The salvage value for each of the projects is zero. Monty uses straight-line depreciation. Monty will not accept any project with a payback period over 2.2 years. Monty's minimum required rate of return is 12%. Most desirable Least desirable CC Your answer has been saved. See score details after the due date. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) 10,000 $33,000 Project CC Project AA AA Indicating the most desirable project and the least desirable project using this method. 2.72 years BB 2.31 years CC 2.20 years Attempts: 1 of 1 used
Transcribed Image Text:Monty Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,200. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total AA (a) 10,000 $8,000 $10,900 $12,000 11,000 16,000 BB $34,000 $32,700 10,900 Click here to view PV tables. 10,900 Payback period The salvage value for each of the projects is zero. Monty uses straight-line depreciation. Monty will not accept any project with a payback period over 2.2 years. Monty's minimum required rate of return is 12%. Most desirable Least desirable CC Your answer has been saved. See score details after the due date. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) 10,000 $33,000 Project CC Project AA AA Indicating the most desirable project and the least desirable project using this method. 2.72 years BB 2.31 years CC 2.20 years Attempts: 1 of 1 used
(b) Compute the net present value of each project. (Use the above table.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Net present value $ Most desirable Least desirable Indicating the most desirable project and the least desirable project using this method. Save for Later AA Project CC Project AA Project BB $ BB CC Attempts: 0 of 1 used Submit Answer
Transcribed Image Text:(b) Compute the net present value of each project. (Use the above table.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Net present value $ Most desirable Least desirable Indicating the most desirable project and the least desirable project using this method. Save for Later AA Project CC Project AA Project BB $ BB CC Attempts: 0 of 1 used Submit Answer
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