Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pithe Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $27.000 per year and have a

image text in transcribed

image text in transcribed

image text in transcribed

Pithe Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $27.000 per year and have a zero residual value. Server A's estimated useful life is three years, and it costs $43,000. Server will generate nel cash inflows of $29,000 in year 1. $10,000 in year 2, and S4,000 in year 3. Server B has a $5,000 residual value and an estimated useful life of three years. Server B also costs $43,000. Pithe Computer Company's required rate of return is 169. Rand the requirements Requirement 1. Calculate payback, accounting rate of return, net present value, and internal rate of return for bath server investments. Use Microsoft Excel to calculate NPV and IRR. Begin with the payback period for Server A. (Round your answer to one decimal place XX) Payback years Server A Now determine the payback period for Server B. (Round your answer to one decimal place, XX.) The payback period for Server Bis years Calculate the accounting rate of retum (ARR) for both server investments, (Round Al intermediary calculations to the nearest whole dollar. Round your answers to the nearest hundredth percent X.XX%. ARR Server Server 35 Calculate the net present value NPV for both server investments. Use Microsoft Excel tocafoutate NPV. Round the NPV calculations to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value X Requirements Serve Serve Calcu IRR. (Round the IRR 1. Calculate pack, accounting of return not present value and internal rate afraturn for both servar investments. Use Microsoft Excel to calculate NPV and RR 2. Assuming capitation och server should Piche Computer Company invest in? Barva Chat Fron Prin Done Thune here to search a E Pithe Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $27.000 per year and have a zero residual value. Server A's estimated useful life is three years, and it costs $43,000. Server B wil generate net cash inflows of $29,000 in year 1, $10,00D in year 2, and 34,000 in year 3, Server B has a $5,000 residual value and an estimated useful life of three years. Server B also costs $43.000. Pithe Computer Company's required rate of return is 1696 Read the requirements NPY Server A Server B Calculate the internal rate of return (IRR) for both server investments. Use Microsoft Excel to calculate IRR. (Round the IRR calculations to two decimal places, X.XX%. IRR Server A 5% Server B 9 Requirement 2. Assuming capital rationing applies, which server should Pithe Computer Company invest in? Based on the calculated results in Requirement 1. Server A panod is than the server's operating life, NPV is rate of retum. Based on the foregoing quantitative factors, Server Ais The payback than the required and the ARR and IRR are both Based on the calculated results in Requirement 1, Server B period is the server's operating life, NPV 8 and the ARR and IRR are both rate of retum. Based on the foregoing Quantitative factors, Server Bis The payback than the required Assuming capital rationing applies, which server should Pithe Computer Company invest in? O A. Based on the foregoing quantitative factors alone, both Server A and Server B should be rejected. Qualitative factors do not need to be considered B. Based on the foregoing quantitative factors, Server A should be rejected. If qualitative factors do not change the decision, then Pithe should invest in Server B. C. Based on the foregoing quantitative factors alone, both Server A and Server B should be accepted. Qualitative factors do not need to be considered. D. Based on the foregoing quantitative factors, Server B should be rejected. If qualitative factors do not change the decision, then Pithe should invest in Server A. Choose from list Pithe Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $27.000 per year and have a zero residual value. Server A's estimated useful life is three years, and it costs $43,000. Server will generate nel cash inflows of $29,000 in year 1. $10,000 in year 2, and S4,000 in year 3. Server B has a $5,000 residual value and an estimated useful life of three years. Server B also costs $43,000. Pithe Computer Company's required rate of return is 169. Rand the requirements Requirement 1. Calculate payback, accounting rate of return, net present value, and internal rate of return for bath server investments. Use Microsoft Excel to calculate NPV and IRR. Begin with the payback period for Server A. (Round your answer to one decimal place XX) Payback years Server A Now determine the payback period for Server B. (Round your answer to one decimal place, XX.) The payback period for Server Bis years Calculate the accounting rate of retum (ARR) for both server investments, (Round Al intermediary calculations to the nearest whole dollar. Round your answers to the nearest hundredth percent X.XX%. ARR Server Server 35 Calculate the net present value NPV for both server investments. Use Microsoft Excel tocafoutate NPV. Round the NPV calculations to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value X Requirements Serve Serve Calcu IRR. (Round the IRR 1. Calculate pack, accounting of return not present value and internal rate afraturn for both servar investments. Use Microsoft Excel to calculate NPV and RR 2. Assuming capitation och server should Piche Computer Company invest in? Barva Chat Fron Prin Done Thune here to search a E Pithe Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $27.000 per year and have a zero residual value. Server A's estimated useful life is three years, and it costs $43,000. Server B wil generate net cash inflows of $29,000 in year 1, $10,00D in year 2, and 34,000 in year 3, Server B has a $5,000 residual value and an estimated useful life of three years. Server B also costs $43.000. Pithe Computer Company's required rate of return is 1696 Read the requirements NPY Server A Server B Calculate the internal rate of return (IRR) for both server investments. Use Microsoft Excel to calculate IRR. (Round the IRR calculations to two decimal places, X.XX%. IRR Server A 5% Server B 9 Requirement 2. Assuming capital rationing applies, which server should Pithe Computer Company invest in? Based on the calculated results in Requirement 1. Server A panod is than the server's operating life, NPV is rate of retum. Based on the foregoing quantitative factors, Server Ais The payback than the required and the ARR and IRR are both Based on the calculated results in Requirement 1, Server B period is the server's operating life, NPV 8 and the ARR and IRR are both rate of retum. Based on the foregoing Quantitative factors, Server Bis The payback than the required Assuming capital rationing applies, which server should Pithe Computer Company invest in? O A. Based on the foregoing quantitative factors alone, both Server A and Server B should be rejected. Qualitative factors do not need to be considered B. Based on the foregoing quantitative factors, Server A should be rejected. If qualitative factors do not change the decision, then Pithe should invest in Server B. C. Based on the foregoing quantitative factors alone, both Server A and Server B should be accepted. Qualitative factors do not need to be considered. D. Based on the foregoing quantitative factors, Server B should be rejected. If qualitative factors do not change the decision, then Pithe should invest in Server A. Choose from list

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions