Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of$222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1)Note: Use appropriate factor(s) from the tables provided.Net cashflowsYear 1Year 2Year 3TotalsRequired AProjectC1Project C1Year 1Year 2Year 3$ 10,000106,000166,000a. The company requires a 12% return from its investments. Compute net present values using factors fromTable B.1 in Appendix B to determine which projects, if any, should be accepted.b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii)Project C2? Hint: It is not necessary to compute IRR to answer this question.TotalsComplete this question by entering your answers in the tabs below.Project C2Year 1Year 2Year 3282,000Totals$Required BThe company requires a 12% return from its investments. Compute net present valuesusing factors from Table B.1 in Appendix B to determine which projects, if any, should beaccepted.Note: Negative net present values should be indicated with a minus sign. Round yourpresent value factor to 4 decimals. Round your answers to the nearest whole dollar.Show lessNet Cash Flows$ProjectC2$ 94,00094,00094,000$282,000Net Cash Flows$Which projects, if any, should be accepted0XXPresent Valueof 1 at 12%Present Valueof 1 at 12%< Required APresent Value ofNet Cash FlowsPresent Value ofNet Cash FlowsRequired B>

The question is related to Capital Budgeting. The Net Present value is calculated with the help of…

Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Required A Required B Project C1 Year 1 Year 2 Year 3 $ 282,000 Complete this question by entering your answers in the tabs below. Totals Project C2 Year 1 Year 2 Year 3 The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Totals Note: 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. Show less A Net Cash Flows Project C2 $ $ 94,000 94,000 94,000 $ 282,000 Net Cash Flows $ Which projects, if any, should be accepted 0 0 X X Present Value of 1 at 12% Present Value of 1 at 12% < Required A = = = Present Value of Net Cash Flows Present Value of Net Cash Flows Required B >

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 4MAD