Question
The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the upcoming budget year: Use Table 6-4 and Table 6-5.
The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)
Project | |||||||||||||||||||||
Year(s) | A | B | C | D | E | ||||||||||||||||
Initial investment | 0 | $ | (57,000 | ) | $ | (64,000 | ) | $ | (128,000 | ) | $ | (128,000 | ) | $ | (265,000 | ) | |||||
Amount of net cash return | 1 | 12,000 | 0 | 41,000 | 12,800 | 77,000 | |||||||||||||||
2 | 12,000 | 0 | 41,000 | 25,600 | 77,000 | ||||||||||||||||
3 | 12,000 | 25,600 | 41,000 | 38,400 | 42,000 | ||||||||||||||||
4 | 12,000 | 25,600 | 41,000 | 51,200 | 42,000 | ||||||||||||||||
5 | 12,000 | 25,600 | 41,000 | 64,000 | 42,000 | ||||||||||||||||
Per year | 6-10 | 12,000 | 15,400 | 0 | 0 | 42,000 | |||||||||||||||
NPV (14% discount rate) | $ | 3,225 | $ | ? | $ | ? | $ | ? | $ | 2,688 | |||||||||||
Present value ratio | 1.06 | ? | ? | ? | ? | ||||||||||||||||
Which projects would you recommend for investment if the cost of capital is 14% and
c-1. $130,000 is available for investment?
choices are project A, B, C, D, E (choose one)
c-2. $390,000 is available for investment?
choices are project A, B, C, D, E (select all that apply)
c-3. $648,000 is available for investment?
choices are project A, B, C, D, E (select all that apply)
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