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CheyenneCompany is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net income

CheyenneCompany is considering two capital investment proposals. Estimates regarding each project are provided below:

Project Soup Project Nuts
Initial investment $400000 $600000
Annual net income 46000 62000
Net annual cash inflow 122000 153000
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 annual rate of return for Project Soup is

11.5%.

23%.

30.5%.

61%.

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