Phyllo Computer Company is considering purchasing two different types of servers. Server A will generate net cash inflows of $20,000 per year and have a zero residual value. Server A's estimated useful life is three years, and it costs $36,000. Server B will generate net cash inflows of $20,000 in year 1, $12,000 in year 2, and $4,000 in year 3. Server B has a $5,000 residual value and an estimated useful life of three years. Server B also costs $36,000. Phyllo Computer Company's required rate of return is 12%. Read the requirements Requirement 1. Calculate payback, accounting rate of return, net present value, and internal rate of return for both server investments. Use Michosoft Excel to calculate NPV and IRR. Begin with the payback period for Server A. (Round your answer to one decimal place, X.X.) Payback Server A years Now determine the payback period for Server B. (Round your answer to one decimal place, X.X.) The payback period for Server B is years. Calculate the accounting rate of return (ARR) for both server investments. (Round all intermediary calculations to the nearest whole dollar. Round your answers to the nearest hundredth percent, X.XX%.) + = Server A Server B ARR % + % Calculate the net present value (NPV) for both server investments. Use Microsoft Excel to calculate NPV. (Round the NPV calculations to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) NDV Choose from any list or enter any number in the input fields and then continue to the next question ? Calculate the net present value (NPV) for both server investments. Use Microsoft Excel to calculate NPV. (Round the NPV calculations tq-the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) NPV I Server A Server B 1 Calculate the internal rate of return (IRR) for both server investments. Use Microsoft Excel to calculate IRR. (Round the IRR calculations to two decimal places, X.XX%.) IRR % Server A Server B % er B Requirement 2. Assuming capital rationing applies, which server should Phyllo Computer Company invest in? than the Based on the calculated results in Requirement 1, Server A The payback period is server's operating life, NPV is and the ARR and IRR are both required rate of return. Based on the foregoing quantitative factors, Server A is V than the F nd 5,0 Based on the calculated results in Requirement 1. Server B The payback period is server's operating life, NPV is and the ARR and IRR are both the than the required rate of return. Based on the foregoing quantitative factors. Server B is Assuming capital rationing applies, which server should Phyllo Computer Company invest in? O A. Based on the foregoing quantitative factors alone, both Server A and Server B should be rejected. Qualitative factors do not need to be considered. O B. Based on the foregoing quantitative factors, Server A should be rejected. If qualitative factors do not change the decision, then Phyllo should invest in Server B. O C. Based on the foregoing quantitative factors alone, both Server A and Server B should be accepted. Qualitative factors do not need to be considered. OD. Based on the foregoing quantitative factors, Server B should be rejected. If qualitative factors do not channe the derision then Phyllo should invett in Server A HO ree years. Server B also costs $36,000. Phyllo Computer Company's required rate of return is 12%. Red * Requirements Ass o O 1. Calculate payback, accounting rate of return, net present value, and internal rate of return for both server investments. Use Microsoft Excel to calculate NPV and IRR. 2. Assuming capital rationing applies, which server should Phyllo Computer Company invest in? Print Done ? moose from any list or enter any number in the input fields and then continue to the next estion P 10:20 PM 12/2/2020 Prt Scn F8 Home 9 End Pg UP FH PgDn512 F10 ) 0 8 9
