he management of FICSIT Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Wind Turbines Biofuel Equipment 1 $270,000 $300,500 2 $270,000 $300,500 3 $270,000 $300,500 4 $270,000 $300,500 The wind turbines require an investment of $877,600, while the biofuel equipment requires an investment of $910,000. No residual value is expected from either project. a.Compute the following for each project: i. The net present value. Use a rate of 6% and the present value of an annuity of $1 table appearing in this chapter (Exhibit 5). ii. A present value index. (Round to two decimal places.) b. Determine the internal rate of return for each project by:i. computing a present value factor for an annuity of $1 and ii. using the present value of an annuity of $1 table appearing in this chapter (Exhibit 5). c.What advantage does the internal rate of return method have over the net present value method in comparing projects?
The management of FICSIT Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:
Year Wind Turbines Biofuel Equipment
1 $270,000 $300,500
2 $270,000 $300,500
3 $270,000 $300,500
4 $270,000 $300,500
The wind turbines require an investment of $877,600, while the biofuel equipment requires an investment of $910,000. No residual value is expected from either project.
a.Compute the following for each project: i. The
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