Question
[The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the
[The following information applies to the questions displayed below.]
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 | $ | (59,000 | ) | $ | (68,000 | ) | $ | (136,000 | ) | $ | (136,000 | ) | $ | (272,000 | ) | |||||
Amount of net cash return | 1 | 13,400 | 0 | 46,000 | 13,600 | 90,000 | |||||||||||||||
2 | 13,400 | 0 | 46,000 | 27,200 | 90,000 | ||||||||||||||||
3 | 13,400 | 29,000 | 46,000 | 40,800 | 45,500 | ||||||||||||||||
4 | 13,400 | 29,000 | 46,000 | 54,400 | 45,500 | ||||||||||||||||
5 | 13,400 | 29,000 | 46,000 | 68,000 | 45,500 | ||||||||||||||||
Per year | 6-10 | 13,400 | 18,000 | 0 | 0 | 45,500 | |||||||||||||||
NPV (18% discount rate) | $ | 1,221 | $ | ? | $ | ? | $ | ? | $ | 2,155 | |||||||||||
Present value ratio | 1.02 | ? | ? | ? | ? | ||||||||||||||||
Required:
a. Calculate the net present value of projects B, C, and D, using 18% as the cost of capital for Scott, Inc. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)
Project | Net Present Value |
B | |
C | |
D |
b. Calculate the present value ratio for projects B, C, D, and E. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Project | Present Value Ratio |
B | |
C | |
D | |
E |
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