Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 24-14 (Algo) Net present value of an annuity LO P3 Information for two alternative projects involving machinery investments follows. Project 1 requires an
Exercise 24-14 (Algo) Net present value of an annuity LO P3 Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $128,800. Project 2 requires an initial investment of $94,500. Assume the company requires a 10% rate of return on its investments. (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 $ 102,600 Project 2 $ 80,200 33,600 18,900 21,000 $ 7,550 $ 6,700 68,250 18,400 8,400 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Present Value Project 1 Net Cash Flows x of Annuity at 10% Present Value of Net Cash Flows Years 1-7 Net present value Present Value Project 2 Net Cash Flows x of Annuity at Present Value of Net Cash Flows 10% Years 1-5 Net present value
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started