Kingbird Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net income 50000 66000 Net annual cash inflow 126000 157000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is O 31.5%, O 12.5%. O 25%. O 63%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Kingbird Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup
Project Nuts
Initial investment
$400000
$600000
Annual net income
50000
66000
Net annual cash inflow
126000
157000
Estimated useful life
5 years
6 years
Salvage value
0
0
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
Periods
9%
10%
11%
12%
5 3.89 3.791 3.696 3.605
6
4.486 4.355 4.231 4.111
The annual rate of return for Project Soup is
O 31.5%,
O 12.5%.
O 25%.
O 63%.
Transcribed Image Text:Kingbird Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net income 50000 66000 Net annual cash inflow 126000 157000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is O 31.5%, O 12.5%. O 25%. O 63%.
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