{PROBLEM- SERIES A Section 10-19A of Ch. 10 Planning for Capital Investments of Fundamental Managerial Accounting Concepts}

Dwight Donovan, the president of Donovan 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 $400,000 and for Project B are $160,000. The annual expected cash flows are $126,000 for Project A and $52,800 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Donovan Enterprises desired rate of return in 8 percent.

Use Excel showing all work and formulas to compute the following:

• Compute the net present value of each project. Round your computations to 2 decimal points
• Compute the approximate internal rate of return for each project. Round your rates to 6 decimal points

ANSWER THE FOLLOWING QUESTIONS SEPARATELY PLEASE

• Analyze the results of the net present value calculations and the significance of these results, supported with examples.
• Determine which project should be adopted based on the net present value approach and provide a rationale for your decision.
• Analyze the results of the internal rate of return calculations and the significance of these results supported with examples
• Determine which project should be adopted based on the internal rate of return approach and provide a rationale for your decision.
• Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.
• Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises

Cite all reference to support this assignment.