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Bramble Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $330000 $624000 Annual net
Bramble Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup | Project Nuts | |||
Initial investment | $330000 | $624000 | ||
Annual net income | 30000 | 46000 | ||
Net annual cash inflow | 110000 | 146000 | ||
Estimated useful life | 5 years | 6 years | ||
Salvage value | 0 | 0 |
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1 | ||||
Periods | 9% | 10% | 11% | 12% |
5 | 3.89 | 3.791 | 3.696 | 3.605 |
6 | 4.486 | 4.355 | 4.231 | 4.111 |
The net present value for Project Nuts is
$11830.
$635830.
$270206.
$104000.
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