Please help!
just req 1
Labeau Products, Ltd., of Perth, Australia, has $32,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Investment required Annual cash inflows Single cash inflow at the end of 6 years Life of the project Invest Invest in in Project Project $32,000 $32,000 $ 9,000 $60,000 6 years 6 years The company's discount rate is 16%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y, 3. Which project would you recommend the company accept? Complete this question by entering your answers in the tabs below. Required Required Required Compute the net present value of Project X. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Net presents (1,165 value Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required Required Required Compute the net present value of Project Y. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Net present $ 7,400X value Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Life of Internal Net the Rate Investment Present Project of Project Required Value (years) Return $940,000 $507,6797 25% $715,000 $261,626 12 $640,000 $296,506 7 23% $840,000 $136,185 198 178 The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the project profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return. Complete this question by entering your answers in the tabs below. Required Required Compute the project profitability Index for each project. (Round your answers to 2 decimal places.) Project Project Profitability Index 1.54 1.373 1.48 Required Required 2 > Complete this question by entering your answers in the tabs below. Required Required 12 In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return. Net Project Present Profitability Value Index A OA Internal Rate of Return A o > > First preference Second preference Third preference Fourth preference BOB B > DOD oc The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company's present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $30,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole: Annual cost of servicing, taxes, and licensing Repairs, first year Repairs, second year Repairs, third year $4,600 $2,500 $5,000 $7,000 At the end of three years, the fleet could be sold for one-half of the original purchase price, Lease alternative: The company can lease the cars under a three- year lease contract. The lease cost would be $65,000 per year (the first payment due at the end of Year 1). As part of this lease cost, the owner would provide all servicing and repairs, license the cars, and pay all the taxes. Riteway would be required to make a $12,500 security deposit at the beginning of the lease period, which would be refunded when the cars were returned to the owner at the end of the lease contract. Riteway Ad Agency's required rate of return is 14% Click here to view Exhibit 78:1 and Exhibit 7B-2. to determine the appropriate discount factor(s) using tables Required: 1. What is the net present value of the cash flows associated with the purchase alternative? 2. What is the net present value of the cash flows associated with the lease alternative? 3. Which alternative should the company accept? Complete this question by entering your answers in the tabs below. Required Required Required What is the net present value of the cash flows associated with the purchase alternative? (Round your final answer to the nearest whole dollar amount. Enter negative amount with a minus sign.) Net present 220,1998 value
