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Ish lows 60,000 X 33,300 X 19,500 X Present Value Factor Present Value of Net Cash Flows 0.9091 $ 0.8264 0.7513 13,637 X 23,635 X 14,650 X

Ish lows 60,000 X 33,300 X 19,500 X Present Value Factor Present Value of Net Cash Flows 0.9091 $ 0.8264 0.7513 13,637 X 23,635 X 14,650 X

FINANCIAL ACCOUNTING
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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Compute net present value for each project. Based on net present value, which project is preferred? Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar. Project 1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project 2 Year 1 Year 2 Year 3 Totals Initial investment Net Cash Flows $ 60,000 X 33,300 19,500 $ 112,800 $ S 35,000 20,000 20.000 75,000 Present Value Factor 0.9091 0.8264 0.7513 $ $ $ 0.9091 $ 0.8264 0.7513 $ Present Value of Net Cash Flows 13,637 X 23,635 X 14,650 X 51,922 (60,000) (8,078) 31,819 16,528 15,026 63,373 (58,000) X F 272
Transcribed Image Text:Compute net present value for each project. Based on net present value, which project is preferred? Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar. Project 1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project 2 Year 1 Year 2 Year 3 Totals Initial investment Net Cash Flows $ 60,000 X 33,300 19,500 $ 112,800 $ S 35,000 20,000 20.000 75,000 Present Value Factor 0.9091 0.8264 0.7513 $ $ $ 0.9091 $ 0.8264 0.7513 $ Present Value of Net Cash Flows 13,637 X 23,635 X 14,650 X 51,922 (60,000) (8,078) 31,819 16,528 15,026 63,373 (58,000) X F 272
Exercise 26-9 (Static) Payback period; net present value; unequal cash flows LO P1, P3 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) Note: Use appropriate factor(s) from the tables provided. Year Initial investment 1. 2. 3. Net Cash Flows Project 1 $ (60,000) 30,000 30,000 5,000 Project 2 $ (60,000) 35,000 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?
Transcribed Image Text:Exercise 26-9 (Static) Payback period; net present value; unequal cash flows LO P1, P3 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) Note: Use appropriate factor(s) from the tables provided. Year Initial investment 1. 2. 3. Net Cash Flows Project 1 $ (60,000) 30,000 30,000 5,000 Project 2 $ (60,000) 35,000 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?
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