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Posted on Jun 03, 2024

Problem 16-19A (Algo) Using net present value and internal rate of return to evaluate investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Stuart

Problem 16-19A (Algo) Using net present value and internal rate of return to evaluate investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Stuart Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $110,000 and for Project B are $41,000. The annual expected cash inflows are $32,475 for Project A and $12,934 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Stuart Enterprises' desired rate of return is 6 percent. PV of $1 and PVA of $.1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each project. Which project should be adopted based on the net present value approach? b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each project, which project should be adopted based on the net present value approach? (Round your final answers to 2 decimal places.) Net Present Value Prev 1 of 3 Next > TABLE 1 PRESENT VALUE OF 51 ST 1 19 51 IETLICO COSCOO OOO 90CC60 3 94 105 125 165 30 09615330033351 0.90909100920570077193 0.062009 0.033333 0.924556 0 00700 0359996 0.573139 0057339 0.541600 0325146 0.197191 0769460 0.743163069 07721030751315017500674072 0.610055 070704 0.522702 0.792004 0.762095 0,7350300705425 00130130635513 05920000553291 0.021027 0.703526 0.747251 0.712986 06005) 0.61-1993 0170113 0101078 5 5 0.739913 0.71003 0005037 0503490 C COCO SOCISO 6190CO DO90006699 O T TOETSTO . CREITO 6006150 LELOSO 16000 CICLO CICLO 1960LO DOSTOSO hoito LOSSSTO160905011950 299630020900090 OSTEO COOGLE DOCSO 960 CCOOTCICO COLTCO cocorotor OOO OOCOCO I ZOO 9200 CLO COCOLOSSOSCOOTO rectrto 0 COSCOLO CORSO 060165 091790 LOCO COLO DOS COCO019090 OREO DETTO 0720000 COCO TIETO COCOSOCCESSO CIOCI POSSLOO CLICCO ISC100 OLOFSSO SSS CEOLITS LOOTLOCO FOSCO CLOCOTO ZTOTTO 696960 CICO COSCO TITLOCO CI OOOO 19PITO T9FOTO TOPLIOTO PI TOGETTO COCO POCO POCO ZISZOO SOZIRO CESICO SO900 LOLOLO TODO COTO SEST TO ZEISSTO SOOTSO 9 TOTOO COOTO ELOSTOO TESSITO SCOPO SE 190SLOTTOSCO 61 COTTO 06 TOCI OD 2096800 000 LOIOIO DOSCOPO LSESSTO 10 11 12 15 0300141020064 0161500 0.520780 0.473003 0.624597 0556037 0.350075 0.2075590.16646) 0112157 06005740330321 0167690 0336179 0259064 0.577475 0.505050 0201030 0199710 0.1251950077007 0.335265 0.451017 036246 0.393646 0335735 0:291690 0.251570 0.217629 0.1631220 122093 0513373 0.436297 03713640 3165740 2702000231073 0197545 0.145644 0 107000 0000307 0250249 0211994 0.179559 0.1300100094561009144 0037561 0.395734 0.330513 0.276503 02317120194490 0.376539 0311005 0 253419 0214545 0.175.431 0.145614 0103667 00727620081335 0.00054 17 20 TABLE 2 PRESENT VALUE OF AN ANNUITY OF 51 SP SS 56 ser OTTOS 2 3 ! ILLLESI ECO 191564 012266 3 6 7 COSCOOT 115909 T 9 10 11 12 55 0961535 0.953351 1536095 2.775091 2.733243 3.69093 3.545951 4.451022 4339477 5242137 5.075692 0002055 5.756373 0732745 0.463213 7.135332 7.107522 5110690 7.721735 3760477 0306414 9385074 5.363253 9.955643 9.19573 10 563123 2.193611 11.116367 10.379655 11.652296 10.837770 12.165669 11274060 12 659297 11.639557 13.133939 12.085321 13.590.326 12.462210 69 7 100 125 118 16 0913390 09345790935926 0027431 001001 0.593557 0.577193 01620090333333 1 833393 1300013 1.703265 1.759111 733537 109005 1.0-46661 2673012 2024310 2877097233129521065522401831 232165222252.166451 3.165100 3.307211 1312127 2.39720316906530373092913712 2586733 +212364 4100192 3.359651 3.7907873.6017703433051 3274294290012 4917324 1.766510 4623500 4155919 355261 4 1114073008660 3664736 335510 5.582351 5309209 52063703.032953 4.160419 45637574206305 3004592 0.209794 5.971299 57.466393534519 5334926967610 6380644345591 037100 6 301692 6 515232 626630 3.995247 5.7590245325250 4 016372 40.50962 73360007 7023532 6710001 6.476536144567 5650323 5216116 1333227 192172 7506675 7.195674 7.130964 6.305191 0.493061 3.937699 5452733 5033611 4337000 3.30351 7912066 7530070 7.100725 6813092 6.194374 3.600292.197107 4439217 3.85233 9:357651 7903770 7160904 7.103356 6423545 5543562 3312338 9.291954 5245465 8.244237 7.7561507360007 66251686.00207254675294610567 9.712219 9 107914 8 559479 3.000000 7606000 631036 6142165 5575450 +675473 10.105895 9140619 051 369 312555 7023709 6.973956 0265000 5665497 10.477200 9.7632219121635 $ 5436313021553 7119030 6372059 3.743701 1774614 10.32760 10.0590579371637 755625.201412 7249670 64674305.517543 451195 11. ISS116 10 335595 9,603599 39051133361920 73657776.550369 3.3774554343496 11.169921 10.594014 9315147 91285465.513561 7469144 6633131 59233110930 159UEST 14 15 10 17 19SULT SI 19 20 a. Compute the net present value of each project. Which project should be adopted based on the net present value approach? b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each project. Which project should be adopted based on the net present value approach? (Round your final answers to 2 decimal places.) Net Present Value Project A Project B Which project should be adopted? Project B Recure A Required 8 >