2. Hsung Company accumulates the following data concerning a proposed capital investment: cash cost $208,780, net annual cash flows $44,000, and present value factor of cash inflows for 10 years 5.02 (rounded). (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).) Determine the net present value, and indicate whether the investment should be made.

Net present value

$enter net present value in dollars

4.

McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $541,790, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $74,500. Project B will cost $337,749, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $48,000. A discount rate of 7% is appropriate for both projects. Click here to view PV table. Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Net present value - Project A		$enter a dollar amount rounded to 0 decimal places
Profitability index - Project A		enter the profitability index rounded to 2 decimal places
Net present value - Project B		$enter a dollar amount rounded to 0 decimal places
Profitability index - Project B		enter the profitability index rounded to 2 decimal places

Which project should be accepted based on Net Present Value?

select a project that should be accepted based on the Net Present Value Project BProject A should be accepted.

Which project should be accepted based on profitability index?

select a project that should be accepted based on the profitability index Project AProject B should be accepted.

5. Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $177,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash flows by $35,168What is its approximate internal rate of return? (Round answer to 0 decimal place, e.g. 125.)

Internal rate of return