Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26.400. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,400 $12,000 $15,600 2 10,800 12.000 14,400 3 14,400 12,000 13.200 Total $33,600 $36,000 $43,200 The equipment's salvage value is zero, and Carla Vista uses straight-line depreciation. Carla Vista will not accept any project with a cash payback period over 2 years. Carla Vista's required rate of return is 12%. Click here to view PV table. Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) AA BB CC Which is the most desirable project based on net present value? The most desirable project based on net present value is Which is the least desirable project based on net present value? The least desirable project based on net present value is Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26.400. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,400 $12,000 $15,600 2 10,800 12.000 14,400 3 14,400 12,000 13.200 Total $33,600 $36,000 $43,200 The equipment's salvage value is zero, and Carla Vista uses straight-line depreciation. Carla Vista will not accept any project with a cash payback period over 2 years. Carla Vista's required rate of return is 12%. Click here to view PV table. Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) AA BB CC Which is the most desirable project based on net present value? The most desirable project based on net present value is Which is the least desirable project based on net present value? The least desirable project based on net present value is
Expert Answer:
Answer rating: 100% (QA)
To evaluate the three projects we need to calculate the present value PV of the net annual cash flow... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
Consider a stock currently (S 0 ) priced at SAR 80. One period later it can go up(u) by 25% or go down(d) by 20%. The risk-free rate is 7 percent. Calculate the current/theoretical value of the...
-
Alan, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on a 12% basis that will enable him to withdraw $59,000 per year on June 30, beginning in 2029...
-
Sampling is essential because it allows researchers to study a population without observing every member of that population. Sampling also will enable researchers to learn rarer events or groups of...
-
Vehicles begin arriving at Allen fieldhouse at 6:30 PM, at a constant rate of 4 per minute. One gate opens at 7:00 PM and processes cars at a rate of 5 vehicles per minute. At 7:10 PM, a second gate...
-
Give an example of a pair of variables that have a positive correlation, a pair of variables that have a negative correlation, and a pair of variables that have zero correlation.
-
What is feed forward control?
-
You are given the following information for a retailer, George Michael, as at 30/6/20x8: During the past year George Michael has withdrawn \($2,000\) cash for his own use, while the net profit,...
-
Quartz Corporation sold a $ 50 million, 7 percent bond issue on January 1, 2015. The bonds pay interest each December 31 and mature 10 years from January 1, 2015. For comparative study and analysis,...
-
Millie Smith is a bookkeeper who is paid $16 per hour on a biweekly basis. Compute her gross pay if she worked 35 hours in week 1 and 45 hours in week 2, assuming overtime is paid after 40 hours...
-
A.What is the main purpose of the law? B.What is the best definition of law? C.Why is law important in society?
-
The following trial balance was taken from the books of ABC Corporation on December 31, 2020 before any adjustments were made. Cash Account Accounts Receivable Notes Receivable Allowance for Doubtful...
-
calculate journal entries, t accounts, unadjusted and adjusted trial balances, and financial statements A Balance Sheet for end of 2022 B E F H K M N R S Assets Cash 94,240 Accounts Receivable (after...
-
After Bernard Inc. completed its first year of operations on December 31, 2015, the following adjusted account balances appeared in the general ledger. Exercises 137 Prepaid Advertising 1,000...
-
Management fees will be paid quarterly, at 2% (annual) of the total limited partner commitment amount, and will be assesed pro-rata. Management fees will be offset by any placement fees paid, until...
-
The following amounts are the totals for each account after the journal entries are complete. Accounts Payable 740.00 Accounts Receivable 4,630.00 Accumulated Depreciation, Computer Equipment 252.00...
-
A company decided to use the units of production method to calculate depreciation on a car to be driven by the sales manager. The amount of annual depreciation will vary with the O number of miles...
-
Draw the appropriate control flow graph of the given pseudocode.Make sure to only use one number for blocks of code which are all sequential and when the first line is executed, all of those lines...
-
Bolivia currently has a nominal 1-year risk-free interest rate of 40 percent, which is primarily due to the high level of expected inflation. The U.S. nominal 1-year risk-free interest rate is 8...
-
Effect of September 11 on Forward Rate Forecasts. The September 11, 2001, terrorist attack on the United States was quickly followed by lower interest rates in the United States. How would this...
-
Assume that interest rate parity exists and it will continue to exist in the future. Assume that interest rates of the United States and the United Kingdom vary substantially in many periods. You...
Study smarter with the SolutionInn App