Question
Calculate the net present value of projects B, C, and D, using 16% as the cost of capital for Scott, Inc.(Negative amounts should be indicated
Calculate the net present value of projects B, C, and D, using 16% as the cost of capital for Scott, Inc.(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the upcoming budget year: Use appropriate factor(s) from the tables attached. Round the PV factors to 4 decimals.
Project | |||||||||||||||||||||
Year(s) | A | B | C | D | E | ||||||||||||||||
Initial investment | 0 | $ | (52,000 | ) | $ | (54,000 | ) | $ | (108,000 | ) | $ | (108,000 | ) | $ | (216,000 | ) | |||||
Amount of net cash return | 1 | 11,000 | 0 | 34,600 | 10,800 | 66,500 | |||||||||||||||
2 | 11,000 | 0 | 34,600 | 21,600 | 66,500 | ||||||||||||||||
3 | 11,000 | 22,000 | 34,600 | 32,400 | 34,500 | ||||||||||||||||
4 | 11,000 | 22,000 | 34,600 | 43,200 | 34,500 | ||||||||||||||||
5 | 11,000 | 22,000 | 34,600 | 54,000 | 34,500 | ||||||||||||||||
Per year | 6-10 | 11,000 | 13,000 | 0 | 0 | 34,500 | |||||||||||||||
NPV (10% discount rate) | $ | 1,165 | $ | ? | $ | ? | $ | ? | $ | 2,115 | |||||||||||
Present value ratio | 1.02 | ? | ? | ? | ? | ||||||||||||||||
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a. Calculate the net present value of projects B, C, and D, using 16% as the cost of capital for Scott, Inc.(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)
b.Calculate the present value ratio for projects B, C, D, and E.(Do not round intermediate calculations. Round your answers to 2 decimal places.)
Which projects would you recommend for investment if the cost of capital is 16% and
c-1.$110,000 is available for investment?
c-2.$329,000 is available for investment?
c-3.$548,000 is available for investment?
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