Question
Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $258,000 and would yield
Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $258,000 and would yield the following annual cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
| C1 | C2 | C3 | ||||||||||
| Year 1 | $ | 22,000 | $ | 106,000 | $ | 190,000 | ||||||
| Year 2 | 118,000 | 106,000 | 70,000 | |||||||||
| Year 3 | 178,000 | 106,000 | 58,000 | |||||||||
| Totals | $ | 318,000 | $ | 318,000 | $ | 318,000 | ||||||
(1) Assume that the company requires a 10% return from its investments. Using net present value, determine which projects, if any, should be acquired. (Negative net present values should be indicated with a minus sign. Round your answers to the nearest whole dollar.)
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BMW Brand Audit
Authors: Marion Maguire
1st Edition
3638653137, 978-3638653138
