Question
Tempura, Inc., is considering two projects. Project A requires an investment of $56,000. Estimated annual receipts for 20 years are $18,000; estimated annual costs are
Tempura, Inc., is considering two projects. Project A requires an investment of $56,000. Estimated annual receipts for 20 years are $18,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $77,000, has annual receipts for 20 years of $23,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and thatMARRis11.5%/year.
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 20.
What is the present worth of each project?
Answer choices:
Select the two best answers: one for project A and one for project B.
A) 13,598
B) -38,451
C) -13,596
D) 25,786
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