Question
6) Fill in the following table to calculate the net present value and benefit/cost ratio of each investment. Round to the nearest dollar and to
6) Fill in the following table to calculate the net present value and benefit/cost ratio of each investment. Round to the nearest dollar and to the nearest hundredth in the benefit/cost ratio.
Investment A
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 |
| $5,000 | $5,000 | $5,000 | $10,000 | $15,000 | $30,000 | $60,000 | $30,000 | $10,000 | $5,000 |
Investment B
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 |
| $20,000 | $10,000 | $10,000 | $5,000 | $5,000 | $2,500 | $2,500 | $1,250 |
6) Fill in the following table to calculate the net present value and benefit/cost ratio of each investment. Round to the nearest dollar and to the nearest hundredth in the benefit/cost ratio.
| Investment A | Investment B | |||||||||||
| Yearly | Present | After-tax | Yearly | Present | After-tax | |||||||
| Year | After-tax | x | Value | = | Present Value | Year | After-tax | x | Value | = | Present Value | |
| Benefit | Factor | of Benefits | Benefit | Factor | of Benefits | |||||||
| 1 | 1 | |||||||||||
| 2 | 2 | |||||||||||
| 3 | 3 | |||||||||||
| 4 | 4 | |||||||||||
| 5 | 5 | |||||||||||
| 6 | 6 | |||||||||||
| 7 | 7 | |||||||||||
| 8 | 8 | |||||||||||
| 9 | ||||||||||||
| 10 | ||||||||||||
| Present Value of Total Benefits | Present Value of Total Benefits | |||||||||||
| Less Initial Cost | Less Initial Cost | |||||||||||
| Net Present Value | Net Present Value | |||||||||||
| Benefit/Cost Ratio | Benefit/Cost Ratio |
If TOMs Tomatoes and Herbs, LLC can only afford to invest in one project, which project should they invest in and why?
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Handbook Of Consumer Finance Research
Authors: Jing J. Xiao
1st Edition
1441926046, 978-1441926043
