Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400. Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net Cash Flows x Project 1 $ 100,800 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 of Annuity at 10% 66,950 18,200 8,240 $ 7,410 Project 2 $ 28,600 Present Value of Net Cash Flows $ 32,960 18,540 20,600 $6,500
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400. Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net Cash Flows x Project 1 $ 100,800 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 of Annuity at 10% 66,950 18,200 8,240 $ 7,410 Project 2 $ 28,600 Present Value of Net Cash Flows $ 32,960 18,540 20,600 $6,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Subject: acounting
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Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400.
Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV
of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.)
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Machinery
Selling, general, and administrative expenses
Income
Years 1-7
Project 1
Net present value
Years 1-5
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.)
Project 2
Net present value
Net Cash Flows X
Net Cash Flows x
Present Value
of Annuity at
10%
Project 1
$ 100,800
Present Value
of Annuity at
10%
66,950
18,200
8,240
$7,410
Present Value of
Net Cash Flows
S
Project 2
$ 78,600
Present Value of
Net Cash Flows
5
32,960
18,540
20,600
$6,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2Fa01e6970-f6de-48ea-bd80-7e25b97c852c%2Fw0c64ft_processed.jpeg&w=3840&q=75)
Transcribed Image Text:B
Dok
int
rences
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $127,400.
Project 2 requires an initial investment of $92.700. Assume the company requires a 10% rate of return on its investments. (PV of $1. EV
of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.)
Annual Amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Machinery
Selling, general, and administrative expenses
Income
Years 1-7
Project 1
Net present value
Years 1-5
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.)
Project 2
Net present value
Net Cash Flows X
Net Cash Flows x
Present Value
of Annuity at
10%
Project 1
$ 100,800
Present Value
of Annuity at
10%
66,950
18,200
8,240
$7,410
Present Value of
Net Cash Flows
S
Project 2
$ 78,600
Present Value of
Net Cash Flows
5
32,960
18,540
20,600
$6,500
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