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Problem 16-19 Using net present value and internal rate of return to evaluate Investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Rooney Enterprises,

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Problem 16-19 Using net present value and internal rate of return to evaluate Investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Rooney Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $108,000 and for Project Bare $38,000. The annual expected cash inflows are $33,336 for Project A and $12,511 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Rooney Enterprises' cost of capital is 8 percent (PV of $1 and PVA of S1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each project. Whic project should be adopted based on the net present value approach? b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Complete this question by entering your answers in the tabs below. Required A Required B Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each project. Which project should be adopted based on the net present value approach? (Round your intermediate calculations and final answers to 2 decimal places.) Net Present Value Project A Project B Which project should be adopted? Required B > Complete this question by entering your answers in the tabs below. Required A Required B Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Internal Rate of Return Project A Project B Which project should be adopted?

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