15) Rocco Manufacturing is considering following two investment proposals: Proposal $740.000 5 years Proposal Y S508,000 4 years at Investment Useful life Estimated annual net cash inflows received the end of each year Residual value Depreciation method Annual discount rate 592,000 $154,000 $66,000 Straight-lind 10 Straight-line 9 Compute the present value of the future cash inflows from Proposal X Present value of an ordinary annuity of $1: 8 9 10% 0.926 0.917 0.909 1.783 1.759 1.734 2.577125312487 3.317 3.24 3 .170 3.993 3.890 4.623 4.4864 .355 Present value of $1: 8% 0.926 0.857 0.794 0.739 0.681 0.630 9X10% 0.917 0.909 0.842 0.826 0.772 0.751 0.70 0.663 0.650 0.621 0.596 0.56 A) $583,814 B) $624,800 C) $668,128 D) $762,136 16) Discounted cash flow methods typically A) assume that cash flows will be reinvested when received B) focus on the payback period C) comply with the requirements of GAAP D) use simple interest calculations 17) Which of the following situations suggests the acceptance of an investment proposal? A) The cash inflows are less than the initial investment B) The present value of the net cash inflows exceeds the initial investment C. The investment will have a residual value. D) The IRR is lower than the hurdle rate. 18) The discount rate used in a net present value analysis is the A) rate of interest eamed on a savings account B) rate of interest charged for debt financing of an investment C) required rate of return or the hurdle rate D) rate of inflation