Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Year Project 1 Flows Project 2 Initial investment $ (60,000) $ (60,000) 1. 30,000 35,000 2. 3. 30,000 5,000 20,000 20,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute net present value for each project. Based on net present value, which project is preferred? (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Net Cash Flows Present Value Factor Present Value of Net Cash Flows Project 1 Year 1 Year 2

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of
return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables
provided.)
Net Cash
Year
Project 1
Flows
Project 2
Initial investment
$ (60,000)
$ (60,000)
1.
30,000
35,000
2.
3.
30,000
5,000
20,000
20,000
a. Compute payback period for each project. Based on payback period, which project is preferred?
b. Compute net present value for each project. Based on net present value, which project is preferred?
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute net present value for each project. Based on net present value, which project is preferred? (Round your present
value factor to 4 decimals. Round your final answers to the nearest whole dollar.)
Net Cash
Flows
Present Value
Factor
Present Value of Net
Cash Flows
Project 1
Year 1
Year 2
Transcribed Image Text:Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Year Project 1 Flows Project 2 Initial investment $ (60,000) $ (60,000) 1. 30,000 35,000 2. 3. 30,000 5,000 20,000 20,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute net present value for each project. Based on net present value, which project is preferred? (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Net Cash Flows Present Value Factor Present Value of Net Cash Flows Project 1 Year 1 Year 2
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