PV OF $1

PVA OF $1

Dwight Donovan, the president of Campbell 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 five 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 $118,000 and for Project B are $37,000. The annual expected cash inflows are $31,927 for Project A and $10,777 for Project B. Both investments are expected to provide cash flow benefits for the next five years. Campbell Enterprises' desired rate of return is 6 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 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 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? % % Required A Required B TABLE 1 PRESENT VALUE OF $1 70 90 10% 129 14 20% 1 8% 0.925926 0.857339 0.833333 2 3 0.934579 0.873439 0.816295 0.762895 0.712986 0.793832 0.917431 0.841680 0.772183 0.708425 0.649931 0.909091 0.826446 0.751315 0.683013 0.620921 4 5 6 0.666342 7 S 0.892857 0.797194 0.711780 0.635518 0.567427 0.506631 0.452349 0.403883 0.360610 0.321973 0.287476 9 4% 0.961535 0.924556 O.SSS996 0.854804 0.821927 0.790315 0.759918 0.730690 0.702587 0.675564 0.649581 0.624597 0.600574 0.577475 0.555265 0.533905 0.513373 0.493628 0.474642 0.456387 10 5% 0.952381 0.907029 0.563838 0.822702 0.783526 0.746215 0.710651 0.676839 0.644609 0.613913 0.584679 0.556837 0.530321 0.505068 0.481017 0.458112 0.436297 0.415521 0.395734 0.376859 6% 0.943396 O.SS9996 0.839619 0.792094 0.747255 0.704961 0.665057 0.627412 0.591595 0.558395 0.52678S 0.496969 0.468839 0.442301 0.417265 0.393646 0.371364 0.350344 0.330513 0.311 805 11 0.735030 0.650583 0.630170 0.583490 0.540269 0.500249 0.463193 0.428883 0.397114 0.367695 0.340461 0.315242 0.291890 0.270269 0.250249 0.231712 0.214548 0.622750 0.582009 0.543934 0.508349 0.475093 0.444012 0.414964 0.357817 0.362446 0.335735 0.316574 0.295864 0.27650S 0.258419 0.877193 0.769468 0.674972 0.592080 0.519369 0.455587 0.399637 0.350559 0.307508 0.269744 0.236617 0.207559 0.1 S2069 0.159710 0.140096 0.122892 0.107800 0.094561 0.082945 0.072762 12 16% 0.862069 0.743163 0.640655 0.552291 0.476113 0.410442 0.353830 0.305025 0.262953 0.226684 0.195417 0.168463 0.145227 0.125195 0.107927 0.093041 0.080207 0.069144 0.059607 0.051385 0.596267 0.547034 0.501 866 0.460428 0.422411 0.387533 0.355535 0.326179 0.299246 0.274535 0.251870 0.231073 0.211994 0.194490 0.178431 0.564474 0.513155 0.466507 0.424095 0.385543 0.350494 0.318631 0.289664 0.263331 0.239392 0.217629 0.197845 0.179859 0.163505 0.148644 13 0.694444 0.578704 0.482253 0.40187S 0.33489S 0.279082 0.232568 0.193807 0.161506 0.13458S 0.112157 0.093464 0.077887 0.064905 0.0540SS 0.045073 0.037561 0.031301 0.026084 14 15 0.256675 0.229174 0.204620 0.182696 0.163122 0.145644 0.130040 0.116107 16 17 18 19 20 0.103667 n 4% 5% 690 7% 8% 9% 14% 16% 1 0.952381 2 3 4 5 6 7 S 9 10 11 12 0.961538 1.886095 2.775091 3.629895 4.451822 5.242137 6.002055 6.732745 7.435332 S.110896 8.760477 9.385074 9.985648 10.563123 11.118387 11.652296 12.165669 12.659297 13.133939 13.590326 1.859410 2.723248 3.545951 4.329477 5.075692 5.756373 6.463213 7.107822 7.721735 8.306414 S.563252 9.393573 9.898641 10.379658 10.837770 11.274066 11.699587 12.085321 12.462210 0.943396 1.833393 2.673012 3.465106 4.212364 4.917324 5.582381 6.209794 6.S01692 7.360087 7.586875 S.383844 S.S52683 9.294994 9.712249 10.105895 10.477260 10.527603 11.158116 11.469921 0.934579 1. SOSOIS 2.624316 3.387211 4.100197 4.766540 5.389289 5.971299 6.515232 7.023582 7.495674 7.942656 8.357651 8.74546S 9.107914 9.446649 9.763223 10.059087 10.335595 10.594014 0.925926 1.783265 2.577097 3.312127 3.992710 4.622880 5.206370 5.746639 6.246SSS 6.710051 7.138964 7.536078 7.903776 S.244237 8.559479 S.551369 9.121638 9.371887 9.603599 9.SIS147 0.917431 1.759111 2.531295 3.239720 3.889651 4.485919 5.032953 5.534519 5.995247 6.417655 6.505191 7.160725 7.486904 7.786150 8.06068S 8.312555 8.543631 8.755625 8.905115 9.128546 10% 0.909091 1.735537 2.486852 3.169565 3.790787 4.355261 4.568419 5.334926 5.759024 6.144567 6.495061 6.813692 7.103356 7.366687 7.606050 7.523709 8.021553 8.201412 8.364920 8.513564 12% 0.892857 1.690051 2.401831 3.037349 3.604776 4.111407 4.563757 4.967640 5.328250 5.650223 5.937699 6.194374 6.423548 6.628168 6.810864 6.973986 7.119630 7.249670 7.365777 7.469444 0.877193 1.646661 2.321632 2.913712 3.433081 3.SSS66S 4.288305 4.638564 4.946372 5.216116 5.452733 5.660292 5.542362 6.002072 6.14216S 6.265060 6.372859 6.467420 6.550369 6.623131 0.862069 1.605232 2.245890 2.79S1ST 3.274294 3.684736 4.035565 4.343591 4.606544 4.833227 5.025644 5.197107 5.342334 5.467529 5.575456 5.668497 5.748704 5.517845 5.577455 5.928841 20% 0.833333 1.527778 2.106481 2.588735 2.990612 3.325510 3.604592 3.837160 4.030967 4.192472 4.327060 4.439217 4.532681 4.610567 4.675473 4.729561 4.774634 4.812195 4.543496 4.569580 13 14 15 16 17 18 19 20