Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of limited resources, he will be able to invest in only one of them.

Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B.

Both investments are expected to provide cash flow benefits for the next four years. Donovan Enterprises desired rate of return is 8 percent. Your task, as Senior Accountant, is to use your knowledge of net present value and internal rate of return to identify the preferred method and best investment opportunity for the company and present your results to Dwight Donovan.

Use Excelshowing all work and formulasto compute the following:

The net present value of each project. Round your computations to 2 decimal points.

The approximate internal rate of return for each project. Round your rates to 6 decimal points.

Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan