Pedro Spier, the president of Spier 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 three 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 $118,000 and for Project B are $34,000. The annual expected cash inflows are $46,616 for Project A and $15,139 for Project B. Both investments are expected to provide cash flow benefits for the next three years. Spier Enterprises cost of capital is 8 percent. (PV of $1 http://lectures.mhhe.com/connect/0077632370/Table%201.JPG and PVA of $1 http://lectures.mhhe.com/connect/0077632370/Table%202.JPG ) (Use appropriate factor(s) from the tables provided.)

Required

a-1.

Compute the net present value of each project. (Round your intermediate calculations and final answers to 2 decimal places.)

	Net Present Value
Project A
Project B

+

B-1. Compute the approximate internal rate of return of each project

	Internal Rate of Return
Project A		%
Project B		%

+