Given the following data (Ignore income taxes.): Cost of equipment Annual cash inflows Internal rate of s 48,680 10,000 10% return See separate Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using the tables provided. The life of the equipment must be: O 5 years O 6 years O 7 years It is impossible to determine from the data given

Given the following data (Ignore income taxes.): Cost of equipment Annual cash inflows Internal rate of s 48,680 10,000 10% return See separate Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using the tables provided. The life of the equipment must be: O 5 years O 6 years O 7 years It is impossible to determine from the data given

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Net Cash Flows and NPVs for different discount rate for projects S and L are given below Net Cash Flows ($) Discount Rate (%) NPVS NPVL Year (t) Project S Project L 0% $800 $1100 0 $(3000) $(3000) 5 554.32 1 1500 400 10 161.33 2 1200 900 15 (90.74) (259.24) 3 800 1300 20 (309.03) (565.97) 4 300 1500 g) If projects are mutually exclusive, which project would you accept? i) at 5% ii) at 15% h) If projects are independent (not mutually exclusive), which project(s) would you accept? i) at 5% ii) at 15%
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