Dwight Donovan, the president of Thornton Enterprises, is considering two 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 $$386,000$ and for Project B are $$158,000.$ The

annual expected cash inflows are $$132,000$ for Project A and $$59,800$ for Project $B.$ Both investments are expected to provide cash

flow benefits for the next four years. Thornton Enterprises' desired rate of return is $9$ percent. $($PV of $$1$ and PVA of $$1)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Required

a$.$ Compute the net present value of each project. Which project should be adopted based on the net present value approach?

b$.$ Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return

approach?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Compute the approximate internal rate of return of each project. Which one should be ado

TABLE $2$

Present Value of an Annuity of $$1$

n $4\%5\%6\%7\%8\%9\%10\%12\%14\%16\%20\%$

$10\mathrm{.}9615380\mathrm{.}9523810\mathrm{.}9433960\mathrm{.}9345790\mathrm{.}9259260\mathrm{.}9174310\mathrm{.}9090910\mathrm{.}8928570\mathrm{.}8771930\mathrm{.}8620690\mathrm{.}833333$

$21\mathrm{.}8860951\mathrm{.}8594101\mathrm{.}8333931\mathrm{.}8080181\mathrm{.}7832651\mathrm{.}7591111\mathrm{.}7355371\mathrm{.}6900511\mathrm{.}6466611\mathrm{.}6052321\mathrm{.}527778$

$32\mathrm{.}7750912\mathrm{.}7232482\mathrm{.}6730122\mathrm{.}6243162\mathrm{.}5770972\mathrm{.}5312952\mathrm{.}4868522\mathrm{.}4018312\mathrm{.}3216322\mathrm{.}245892\mathrm{.}106481$

$43\mathrm{.}6298953\mathrm{.}5459513\mathrm{.}4651063\mathrm{.}3872113\mathrm{.}3121273\mathrm{.}2397203\mathrm{.}1698653\mathrm{.}0373492\mathrm{.}9137122\mathrm{.}7981812\mathrm{.}588735$

$54\mathrm{.}4518224\mathrm{.}3294774\mathrm{.}2123644\mathrm{.}1001973\mathrm{.}9927103\mathrm{.}8896513\mathrm{.}7907873\mathrm{.}6047763\mathrm{.}4330813\mathrm{.}2742942\mathrm{.}990612$

$65\mathrm{.}2421375\mathrm{.}0756924\mathrm{.}9173244\mathrm{.}7665404\mathrm{.}6228804\mathrm{.}4859194\mathrm{.}3552614\mathrm{.}1114073\mathrm{.}8886683\mathrm{.}6847363\mathrm{.}325510$

$76\mathrm{.}0020555\mathrm{.}7863735\mathrm{.}5823815\mathrm{.}3892895\mathrm{.}2063705\mathrm{.}0329534\mathrm{.}8684194\mathrm{.}5637574\mathrm{.}2883054\mathrm{.}0385653\mathrm{.}604592$

$86\mathrm{.}7327456\mathrm{.}4632136\mathrm{.}2097945\mathrm{.}9712995\mathrm{.}7466395\mathrm{.}5348195\mathrm{.}3349264\mathrm{.}9676404\mathrm{.}6388644\mathrm{.}3435913\mathrm{.}837160$

$97\mathrm{.}4353327\mathrm{.}1078226\mathrm{.}8016926\mathrm{.}5152326\mathrm{.}2468885\mathrm{.}9952475\mathrm{.}7590245\mathrm{.}3282504\mathrm{.}9463724\mathrm{.}6065444\mathrm{.}030967$

$108\mathrm{.}1108967\mathrm{.}7217357\mathrm{.}3600877\mathrm{.}0235826\mathrm{.}7100816\mathrm{.}4176586\mathrm{.}1445675\mathrm{.}6502235\mathrm{.}2161164\mathrm{.}8332274\mathrm{.}192472$

$118\mathrm{.}7604778\mathrm{.}3064147\mathrm{.}8868757\mathrm{.}4986747\mathrm{.}1389646\mathrm{.}8051916\mathrm{.}4950615\mathrm{.}9376995\mathrm{.}4527335\mathrm{.}0286444\mathrm{.}327060$

$129\mathrm{.}3850748\mathrm{.}8632528\mathrm{.}3838447\mathrm{.}9426867\mathrm{.}5360787\mathrm{.}1607256\mathrm{.}8136926\mathrm{.}1943745\mathrm{.}6602925\mathrm{.}1971074\mathrm{.}439217$

$139\mathrm{.}9856489\mathrm{.}3935738\mathrm{.}8526838\mathrm{.}3576517\mathrm{.}9037767\mathrm{.}4869047\mathrm{.}1033566\mathrm{.}4235485\mathrm{.}8423625\mathrm{.}3423344\mathrm{.}532681$

$1410\mathrm{.}5631239\mathrm{.}8986419\mathrm{.}2949848\mathrm{.}7454688\mathrm{.}2442377\mathrm{.}7861507\mathrm{.}3666876\mathrm{.}6281686\mathrm{.}0020725\mathrm{.}4675294\mathrm{.}610567$

$1511\mathrm{.}11838710\mathrm{.}3796589\mathrm{.}7122499\mathrm{.}1079148\mathrm{.}5594798\mathrm{.}0606887\mathrm{.}6060806\mathrm{.}8108646\mathrm{.}1421685\mathrm{.}5754564\mathrm{.}675473$