Assignment Content

1. For this assignment,use this scenario:
3. Using net present value and internal rate of return to evaluate investment opportunities Dwight Donovan the president of Donovan Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Donovan Enterprises desired rate of return is 8 percent.
5. Read the scenario and complete the activity below.
7. Use Excelshowing all work and formulasto compute the following:

• Compute the net present value of each project.Round your computations to 2 decimal points.
• Compute the approximate internal rate of return for each project. Round your rates to 6 decimal points