Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The monagement of Advanced Alternative Aower inc. is considering two capital investment projects. The estimated net cash flaws from each project are as follows: Year1234WindTurbines$290,000290,000290,000290,000BiofuelEquipment$610,000610,000610,000610,000
The monagement of Advanced Alternative Aower inc. is considering two capital investment projects. The estimated net cash flaws from each project are as follows: Year1234WindTurbines$290,000290,000290,000290,000BiofuelEquipment$610,000610,000610,000610,000 The wind turbines require an investment of $880,730, while the biofuel equipment requires an investment of $1,741,550, No residual value is expected from either project. Present Value of an Annuliy of $1 at Compound Interest \begin{tabular}{cccccc} \hline Year & 6% & 10% & 12% & 15% & 20% \\ \hline 1 & 0.943 & 0.909 & 0.893 & 0.1670 & 0.833 \\ 2 & 1.633 & 1.736 & 1.690 & 1.620 & 1.520 \\ 3 & 2.673 & 2.487 & 2.402 & 2.263 & 2.106 \\ \hline 4 & 3.465 & 3.170 & 3.037 & 2.855 & 2.569 \\ \hline 5 & 4.212 & 3.791 & 3.605 & 3.353 & 2.991 \\ \hline 6 & 4.917 & 4.355 & 4.111 & 3.755 & 3.326 \\ \hline 7 & 5.562 & 4.868 & 4.564 & 4.160 & 3.605 \\ \hline 8 & 6.210 & 5.335 & 4.968 & 4.487 & 3.837 \\ \hline 9 & 6.802 & 5.759 & 5.326 & 4.772 & 4.031 \\ \hline 10 & 7.360 & 6.145 & 5.650 & 5.019 & 4.192 \\ \hline Required: & & & & & \end{tabular} 10. Compute the net present value for esch project. Use a rate of 10% and the present value of an annuity of 51 in the table abeve. If required, use the minus sign to ind cate a negative net aresent value. If required, found to the nearest whole dollar, 1b. Compute a present, value indek for each project. If required, round your answers to two decimal places. required, reund your present value factor answers to Yhree decimal places and ioternal rate of return to the nearest whole percent. 3. The net present value, present value incex, and internal rate of return as indicate that the although both inyestments meet the minimum return criterion of 10%. fis/are a better financial opportunity compared to the
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started