Question
Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $234,000 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 $234,000 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 |
| $ | 14,000 |
|
| $ | 98,000 |
|
| $ | 182,000 |
|
| Year 2 |
|
| 110,000 |
|
|
| 98,000 |
|
|
| 62,000 |
|
| Year 3 |
|
| 170,000 |
|
|
| 98,000 |
|
|
| 50,000 |
|
| Totals |
| $ | 294,000 |
|
| $ | 294,000 |
|
| $ | 294,000 |
|
(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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Message Brand And Dollars Auditing Marketing Operations
Authors: J. Mike Jacka, Peter R. Scott
1st Edition
163454000X, 9781634540001
