Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value
Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net presem values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Present Value Net Cash Flows x of Annulty at Present Value of Net Cash Flows 10% Years 1-7 Net present value Present Value of Annulty at 10% Present Value of Net Cash Flows Project 2 Net Cash Flowsx Years 1-5 Net present value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $129,500.
Project 2 requires an initial investment of $95,40Q. Assume the company requires a 10% rate of return on its investments.
Annual Anounts
Sales of new product
Expenses
Haterials, labor, and overhead (except dapreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Project 2
$ 81,000
Project 1
$ 103,500
68,900
18,500
,480
33,920
19,080
21,200
$ 6,800
Income
$7,620
Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present
values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest
whole dollar.)
Present Value
Net Cash Flowsx of Annulty at
10%
Present Value of
Net Cash Flows
Project 1
Years 1-7
Net present value
Present Value
of Annulty at
10%
Project 2
Present Value of
Net Cash Flows
Net Cash Flowrs x
Years 1-5
Net present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88af8fce-c435-443b-b71c-a96145ca39af%2Fbd58d609-1057-42f1-86bc-63f74c1c4718%2Fqxxrl2s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $129,500.
Project 2 requires an initial investment of $95,40Q. Assume the company requires a 10% rate of return on its investments.
Annual Anounts
Sales of new product
Expenses
Haterials, labor, and overhead (except dapreciation)
Depreciation-Machinery
Selling, general, and administrative expenses
Project 2
$ 81,000
Project 1
$ 103,500
68,900
18,500
,480
33,920
19,080
21,200
$ 6,800
Income
$7,620
Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present
values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest
whole dollar.)
Present Value
Net Cash Flowsx of Annulty at
10%
Present Value of
Net Cash Flows
Project 1
Years 1-7
Net present value
Present Value
of Annulty at
10%
Project 2
Present Value of
Net Cash Flows
Net Cash Flowrs x
Years 1-5
Net present value
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