Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started