Problem 16-19A (Algo) 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 resourcesne will be able to invest in only one of them Project A to purchase a machine that will enable factory automation the machines expected to have a useful or three years and no salvage values supports a training program improve the skills of employees operating the current equipment Initial cash expenditures for Project A are $105,000 and for Project B are $543, 000 The annual expected cash intlows are $41,481 for Project A and $17,903 Project Both investments are expected to provide cash flow benefits for the next three yearsRooney Enterprises desired rate of return is 4 percent (of $PVA 1 (Use appropriate factor(s) from the tables provided .)

Problem 16-19A (Algo) 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 three 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 $105,000 and for Project B are $43,000. The annual expected cash inflows are $41.481 for Project A and $17.903 for Project B. Both investments are expected to provide cash flow benefits for the next three years, Rooney Enterprises desired rate of return is 4 percent. (PV of $1 and PVA of $1 (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each project. Which 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 Compute the net present value of each project which project should be adopted based on the net present value approach? (Round your final answers to 2 decimal places.) Net Present Value Project A Project B Which project should be adopted? Required 0. Compute the net present value of each project. Which project should be adopted based on the not 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 retum approach? 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 Rato of Return Project A Project B Which project should be adopted? Project B