41. BP Company is considering two capital investment proposals.Estimates regarding each project are provided below: Project LS1Project RS1Initial investmentP2000,000P300,000Annual net income10,00021,000Net annual cash inflow50,00071,000Estimated useful life5 years6 yearsSalvage value-0--0- The company requires a 10% rate of return on all new investments.Present Value of an Annuity of 1Period9%10%11%12%53.8903.7913.6963.60564.4864.3554.2314.111 The net present value for Project RS1 is?

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Accounting

net present value for

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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Question

41. BP Company is considering two capital investment proposals.

Estimates regarding each project are provided below:

	Project LS1	Project RS1
Initial investment	P2000,000	P300,000
Annual net income	10,000	21,000
Net annual cash inflow	50,000	71,000
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

Period	9%	10%	11%	12%
5	3.890	3.791	3.696	3.605
6	4.486	4.355	4.231	4.111

The net present value for Project RS1 is?

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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