Question
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $740,000 $520,000 Useful life 5 years 4 years Estimated annual net
Stellan Manufacturing is considering the following two investment proposals:
| Proposal X | Proposal Y | |
| Investment | $740,000 | $520,000 |
| Useful life | 5 years | 4 years |
| Estimated annual net cash inflows received at the end of each year | $170,000 | $90,000 |
| Residual value | $62,000 | $0 |
| Depreciation method | Straightminusline | Straightminusline |
| Annual discount rate | 10% | 9% |
Present value of an ordinary annuity of $1:
| 8% | 9% | 10% | |
| 1 | 0.926 | 0.917 | 0.909 |
| 2 | 1.783 | 1.759 | 1.736 |
| 3 | 2.577 | 2.531 | 2.487 |
| 4 | 3.312 | 3.240 | 3.170 |
| 5 | 3.993 | 3.809 | 3.791 |
| 6 | 4.623 | 4.486 | 4.355 |
Compute the present value of the future cash inflows from Proposal Y.
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Audit Culture How Indicators And Rankings Are Reshaping The World
Authors: Cris Shore, Susan Wright
1st Edition
0745336450, 978-0745336459
