The capital investment committee of Hopewell Company is currently considering two invest nents. The estimated income from operations and net cash flows expected from each investmen re as follows: Each investment requires $80,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Instructions 1. Compute the following: A. The average rate of return for each investment. B. The net present value for each investment. Use the present value of $1 table appearing in this chapter (Exhibit 2). 2. Why is the net present value of the equipment greater than the truck, even though its average rate of return is less? 3. Prepare a summary for the capital investment committee, advising it on the relative merits of the two investments. Need more practice? Find additionat muthiptectolce questons, exurcises, and problems in CengageNowiz. Multiple-Choice Questions 1. C Methods of evalu: include the average (answer B). capital investment proposals of return method (answ ignore the time value of money and the cash payback method 2. Aetermined by dividing the expected Selected information concerning sales and production for Cabot Co. for July are summarized as follows: A. Estimated sales: Product K:40,000 units at $30 per unit Product Li: 20,000 units at $65 per unit B There were no work in process inventories estimated for fuly. There were no work in process inventories desired for July 31 . D. Direct materials used in production: E. Unit costs for direct materials: Material A: $4.00 per lia. Material B: $2.00 perlb. F. Direct labor requirements: H. Estimated factory overhead costs for July: Instructions 1. Prepare a sales budget for July. 2. Prepare a production budget for July. 3. Prepare a direct materials purchases budget for July. 4. Prepare a direct labor cost budget for July. 5. Prepare a cost of goods sold budget for July. Nand wore practice? Find addhtonat wilniplecbolce questions, enercises, and problews tn CeagagoNoWez