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Pina Colada Company is considering two capital investment proposals. Estimates regarding each project are provided below: Initial investment Annual net income Net annual cash inflow
Pina Colada Company is considering two capital investment proposals. Estimates regarding each project are provided below: Initial investment Annual net income Net annual cash inflow Estimated useful life Salvage value Project Soup $400000 38000 114000 5 years 0 Project Nuts $600000 54000 140000 6 years The company requires a 10% rate of return on all new investments. Present Value of an Annuity of Periods 9% 10% 11% 12% 3.89 3.791 3.696 3.605 4.486 4.355 4.231 4.111 6 The annual rate of return for Project Soup is 57% 19%. 9.5% 28.5%
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