Lee Enterprises accepts capital investment projects with a payback period of five years or less. Under this condition, which of the following projects would be acceptable? Project #1Project #2 Annual cash flows$ 25,000$ 40,000 Initial investment125,000160,000 A.Project #1 only.B.Project #2 only.C.Both Project #1 and Project #2.D.Neither Project #1 nor Project #2. Present Value of a Single Sum1 2 3 4 5 6 7 8 9 105%0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.61410% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.38615% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247PV of an Annuity5 6 7 812349105%0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.72210% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.14515% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019

Payback period refers to the time period that is required to recover the initial cost. With the help…

Answered: Lee Enterprises accepts capital…

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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Lee Enterprises accepts capital investment projects with a payback period of five years or less. Under this condition, which of the following projects would be acceptable?

	Project #1	Project #2
Annual cash flows	$ 25,000	$ 40,000
Initial investment	125,000	160,000

A.	Project #1 only.
B.	Project #2 only.
C.	Both Project #1 and Project #2.
D.	Neither Project #1 nor Project #2.

Present Value of a Single Sum
1 2 3 4 5 6 7 8 9 10
5%
0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614
10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386
15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247
PV of an Annuity
5 6 7 8
1
2
3
4
9
10
5%
0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722
10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145
15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019

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