Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Year Plant Expansion Retail Store Expansion 1 $145,000 $121,000 2 118,000 142,000 3 102,000 97,000 4 93,000 68,000 5 29,000 59,000 Total $487,000 $487,000 Each

image text in transcribedimage text in transcribed

Year Plant Expansion Retail Store Expansion 1 $145,000 $121,000 2 118,000 142,000 3 102,000 97,000 4 93,000 68,000 5 29,000 59,000 Total $487,000 $487,000 Each project requires an investment of $263,000. A rate of 15% has been selected for the net present value analysis. Present Value of $1 at Compound Interest 6% 10% % 12% 15% 20% Year 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: Required: 1a. Compute the cash payback period for each product. Cash Payback Period Plant Expansion Retail Store Expansion 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. Plant Expansion Retail Store Expansion Present value net cash fl total $ $ Less amount to be invested $ Net present value 2. Because of the timing of the receipt of the net cash flows, the offers a higher

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield

15th edition

978-1118159644, 9781118562185, 1118159640, 1118147294, 978-1118147290

More Books

Students also viewed these Accounting questions