Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cash Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc is considering two

image text in transcribed
image text in transcribed
Cash Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows Warehouse Tracking Technology Net Net Income from Cash Income from Year Operations Flow Operations Flow 1 $ 61,400 $135,000 $ 34,400 5108,000 2 51,400 125.000 34,400 108.000 3 36,400 -110,000 34,400 108,000 4 26400 100,000 34.400 108,000 5 13,600) 70,000 34.400 108,000 Total $172,000 $540.000 $172,000 $540,000 Each project requires an investment of $368,000. Straight-line depreciation will be used, and no residuales expected. The committee has selected rate of 15 for purposes of the net present value analys Present Value of si at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0,893 02870 0.833 2 0.890 0.826 0.792 0.756 0.69 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.942 0.621 0.567 0.497 0.02 0.705 0.564 0.507 0.432 0335 2 0.665 9.513 0.452 0.376 0.279 On My Workers Check My Working Module 14 CH 26 (NOT GRADED) (Cabook Show Me How UNSUB USTU 2 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.63 0.522 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.70S 0.564 0.507 0432 0.335 2 0.665 0.513 9.452 0.370 0:279 0.62% 0.462 0.404 0.32 0.233 9 3.592 0.624 0.361 0.284 0.194 10 0.550 2.300 0.322 0.247 0.162 Required: 1a. Compute the average rate or column for each investment If required, round your answer to one decimal place Average Rate of Return Warehouse Tracking Technology 1b. Compute the int present value for each investment. Use the presere value or si tahte above. It reoured, use the minus sign to indicate a negative et present value. If required, round to the nearest della Warehouse Tracking Technology Present value of net cash flow total Les amount to be invested Net present value X x 2. The het procent va exceed the selected at tablished for discounted cash (15%), while the des rot. Thus, considering titive actors, the investment should be selected

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Non Specialists

Authors: Catherine Gowthorpe

2nd Edition

1844802051, 978-1844802050

More Books

Students also viewed these Accounting questions

Question

What is the amount of current assets? =

Answered: 1 week ago