Chapter 11: Questions 3 - 8

3. Tremaine Company is considering two mutually exclusive long-term investment projects. Project ABC would require an investment of $240,000, have a useful life of 4 years, and annual cash flows of $78,000. Project XYZ would require an investment of $230,000, have a useful life of 5 years, and annual cash flows of $66,000. Cost of capital is 12 percent.

3 value 12.50 points Tremaine Company is considering two mutually exclusive long-term investment projects. Project ABC would require an investment of $240,000, have a useful life of 4 years, and annual cash flows of $78,000. Project XYZ would require an investment of $230,000, have a useful life of 5 years, and annual cash flows of $66,000. Cost of capital is 12 percent. Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate Calculate NPV. (Future Value of $1, factor(s) from the tables provided. Round your "Future Cash Flow" values to the nearest whole dollar amounts. Negative amounts should be indicated by a minus sign.) Project ABC Table or Calculator Function: Cash Inflow n= Table Factor Future Cash Flow Original Investment NPV of Project ABC Project XYZ Table or calculator function: Cash Inflow n= Table Factor Future Cash Flow Original Investment NPV of Project XYZ Which project do you recommend? O Project ABC Project XYZ