- Use the following information to answer questions 7 and 8 - Kristy Co. spends $50,000 on joint product costs in May the output of which is two products:

Product A - 4000 pounds produced; 3000 pounds sold during May for = $10/lb.

Product B - 12000 lbs produced; all sold during May for $5/lb

There are no beginning inventories. The selling prices are considered stable market prices (You should be able to sell any unsold products in June for the same price you received in May)

7. (a) allocate the joint product costs to A and B using the constant gross margin percentage approach. (b) allocate the joint product costs to A and B using physical measures.

8 White Company can invest in one of two projects, TD1 or TD2. Each project requires an initial investment of $101,250 and produces the year-end cash inflows shown in the following table.

	Net cash flows	Net Cash Flows
	TD1	TD2
Year 1	$20,000	$40,000
Year 2	30000	40000
Year 3	70000	40000
Totals	120000	120000

1.Compute the payback period for both projects. Which project has the shortest payback period?

2.Assume that the company requires a 10% return from its investments. Compute the net present value of each project.

3.Drawing on your answers to parts 1 and 2, determine which project, if any, should be chosen.

4.Compute the internal rate of return for project TD2. Based on its internal rate of return, should project TD2 be chosen?