The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated
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Question:
The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:
Warehouse Tracking Technology
Year Income from
Operations Net Cash
Flow Income from
Operations Net Cash
Flow
$ $ $ $
Total $ $ $ $
Each project requires an investment of $ Straightline depreciation will be used, and no residual value is expected. The committee has selected a rate of for purposes of the net present value analysis.
Present Value of $ at Compound Interest
Year
Required:
a Compute the average rate of return for each investment.
Average Rate of Return
Warehouse fill in the blank
Tracking Technology fill in the blank
b Compute the net present value for each investment. Use the present value of $ table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar.
Warehouse Tracking Technology
Present value of net cash flow total $fill in the blank
$fill in the blank
Less amount to be invested $fill in the blank
$fill in the blank
Net present value $fill in the blank
$fill in the blank
The warehouse has a
net present value as tracking technology cash flows occur
in time. Thus, if only one of the two projects can be accepted, the
would be the more attractive
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