Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Phoenix Company is considering Investments In projects C1 and C2. Both require an Initial Investment of $228,000 and would yield the following annual net cash
Phoenix Company is considering Investments In projects C1 and C2. Both require an Initial Investment of $228,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Net cash flows Project C1 Project C2 Year 1 $ 12, 030 $ 96,803 Year 2 185, 060 Year 3 168,303 Totals $ 285,606 $ 285, 306 a. The company requires a 12% return from Its Investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, If any, should be accepted. b. Using the answer from part a, is the Internal rate of return higher or lower than 12% for (1) Project C1 and (il) Project C2? Hint. It Is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. (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.) Project C1 Net Cash Flows Present Value of 1 at_ = Present Value of Net 12% Cash Flows Year 1 Year 2 Year 3 Totals S Project C2 Net Cash Flows Present Value of 1 at X Present Value of Net 12% Cash Flows Year 1 Year 2 Year 3 Totals S 0 Which projects, if any, should be acceptedRequired A Required B Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. (i) Is the internal rate of return higher or lower than 12% for Project C1? (ii) Is the internal rate of return higher or lower than 12% for Project C2?
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