5.

Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive ) QuillBot Other favorites PROBS 26 eBook Alternative Capital Investments ? 1. PR.26.01A.ALGO The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, 2. PR.26.02A but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Net Cash Flows 3. PR.26.03A Year Office Expansion Servers 4. PR.26.04A 1 $125,000 $165,000 2 125,000 165,000 5. PR.26.05A 3 125,000 165,000 6. PR.26.06A 4 125,000 165,000 UT 125,000 + 6 125,000 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates that the residual value at the end of each project's useful life is $0, but at the end of the fourth year, the office expansion's residual value would be $180,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 Progress: 5/6 items Check My Work Previous Next Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F Q Search LOW - W - a myhp 6:04 PM Sunny 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive QuillBot > Other favorites PROBS 26 eBook 6 0.705 0.564 0.507 0.432 0.335 ? 1. PR.26.01A.ALGO 7 0.665 0.513 0.452 0.376 0.279 2. PR.26.02A 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 3. PR.26.03A 10 0.558 0.386 0.322 0.247 0.162 4. PR.26.04A Present Value of an Annuity of $1 at Compound Interest 5. PR.26.05A Year 6% 10% 12% 15% 20% 6. PR.26.06A 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 + 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Required: 1. For each project, compute the net present value. Use the present value of an annuity of $1 table above. Ignore the unequal lives of the projects. If required, round to Check My Work Previous Next Progress: 5/6 items Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 6:04 PM 81 F Q Search L O C WB a 8/11/2023 SunnyCourse Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false Al G G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive QuillBot > Other favorites PROBS 26 eBook cach project, c 1. PR.26.01A.ALGO the nearest dollar. ? Office Expansion Server Upgrade 2. PR.26.02A Present value of annual net cash flows $ 379,625 X $ 501, 105 3. PR.26.03A Less amount to be invested 490,000 490,000 4. PR.26.04A Net present value -109,375 X $ 10,805 X 5. PR.26.05A 2. For each project, compute the net present value, assuming that the office expansion is adjusted to a four-year life for purposes of analysis. Use the present value of $1 table above. 6. PR.26.06A Office Expansion Server Upgrade + Present value of net cash flow total $ 259,500 X $ 501, 105 X Less amount to be invested 490,000 490,000 Net present value $ -230,500 X $ 10,805 X 3. The net present value of the two projects over equal lives indicates that the server upgrade _ v has a higher net present value and would be a superior investment. Feedback Check My Work Progress: 5/6 items Check My Work Previous Next Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F Q Search a myhp 6:05 PM Sunny 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube . FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive ) QuillBot > Other favorites PROBS 26 eBook Capital Rationing Decision for a Service Company Involving Four Proposals 1. PR.26.01A.ALGO Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated 2. PR.26.02A operating income, and net cash flow for each proposal are as follows 3. PR.26.03A Operating Net Cash Investment Year Income Flow 4. PR.26.04A Proposal A: $680,000 $ 64,000 $ 200,000 N 64,000 200,000 5. PR.26.05A W 64,000 200,000 6. PR.26.06A A 24,000 160,000 24,000 160,000 + $240,000 $ 920,000 Proposal B: $320,000 $ 26,000 $ 90,000 N 26,000 90,000 W 6,000 70,000 A 6,000 70,000 (44,000) 20,000 $ 20,000 $340,000 Proposal C: $108,000 $ 33,400 $ 55,000 31,400 53,000 W N 28,400 50,000 Progress: 6/6 items Check My Work Previous Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F Sunny Q Search a myhp 6:06 PM 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive QuillBot > Other favorites PROBS 26 eBook 25,400 47,000 ? 1. PR.26.01A.ALGO 23,400 45,000 2. PR.26.02A $142,000 $ 250,000 Proposal D: $400,000 $100,000 $ 180,000 3. PR.26.03A N 100,000 180,000 4. PR.26.04A 80,000 160,000 A W 20,000 100,000 5. PR.26.05A 80,000 6. PR.26.06A $300,000 $700,000 The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all + projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 Progress: 6/6 items Check My Work Previous Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F LOW - W - a myhp 6:06 PM Sunny Q Search 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: M X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive QuillBot > Other favorites PROBS 26 eBook 8 0.627 0.467 0.404 1. PR.26.01A.ALGO 0.327 0.233 ? 9 0.592 0.424 0.361 0.284 0.194 2. PR.26.02A 10 0.558 0.386 0.322 0.247 0.162 3. PR.26.03A Required: 4. PR.26.04A 1. Compute the cash payback period for each of the four proposals. 5. PR.26.05A Cash Payback Period Proposal A 3 years 6 months 6. PR.26.06A Proposal B 4 years V Proposal C 2 years + Proposal D 2 years 3 months 2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place. Average Rate of Return Proposal A 3.5 X % Proposal B 1.25 X % Proposal C 26.29625 X % Proposal D 15 X % Progress: 6/6 items Check My Work Previous Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F Sunny Q Search LOW - a myhp 6:07 PM 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: N X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignme CengageNOWv2 | Online teaching and learning G resource from Cengage Learning G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero Q Qu v2.cengagenow.com Google Drive QuillBot > Other favorites PROBS 26 eBook 3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns on the left and ? 1. PR.26.01A.ALGO indicate which proposals should be accepted for further analysis and which should be rejected. If required, round your answers to one decimal place. 2. PR.26.02A Proposal Cash Payback Period Average Rate of Return Accept or Reject 3. PR.26.03A A 3 years, 6 months 27.06 X % Reject B 4 years 6.25 X % Reject 4. PR.26.04A C 2 years 16.86 X % Accept 5. PR.26.05A D 2 years, 3 months 25.00 X% Accept 6. PR.26.06A 4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 15% and the present value of $1 table above. Round to the nearest dollar. + Select the proposal accepted for further analysis. Proposal C Proposal D Present value of net cash flow total Less amount to be invested Net present value $ -1,411 X $ -107,060 X 5. Compute the present value index for each of the proposals in part (4). If required, round your answers to two decimal places. Select proposal to compute Present value index. Proposal C - V Proposal D - v Present value index (rounded) 20.26 X 0.1357 X Progress: 6/6 items Check My Work Previous Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading 81 F Q Search L O W B anyhp Sunny a 6:07 PM 8/11/2023Course Hero * *Homework Help - Q&A from On X Summer 2023 ACCOUNTING II: N X CengageNOWv2 | Online teachin X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false G G Google M Gmail YouTube * FlashLine Canvas Microsoft Office C Chegg Course Hero O Quizlet Google Slides E Google Docs Google Drive ) QuillBot > Other favorites PROBS 26 eBook 1. PR.26.01A.ALGO 5. Compute the present value index for each of the proposals in part (4). If required, round your answers to two decimal places. ? Select proposal to compute Present value index. Proposal C Proposal D 2. PR.26.02A Present value index (rounded) 20.26 X 0.1357 X 3. PR.26.03A 4. PR.26.04A 6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4). O Rank 1st Proposal D 5. PR.26.05A Rank 2nd Proposal C 6. PR.26.06A 7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5). + Rank 1st Proposal C Rank 2nd Proposal D 8. The analysis indicates that although Proposal D _ v has the larger net present value, it is not as attractive as Proposal C _ v in terms of the amount of present value per dollar invested. Proposal D _ v requires the larger investment. Thus, management should use investment resources for Proposal C _ v before investing in Proposal D _ V , absent any other qualitative considerations that may impact the decision. Feedback Check My Work Progress: 6/6 items Check My Work Previous Assignment Score: 60.1% All work saved. Save and Exit Submit Assignment for Grading Co 81.F Sunny Q Search 6:07 PM 8/11/2023