Net present value-unequal lives Project 1 requires an original investment of $50,100. The project will yield cash flows of $10,000 per year for 8 years. Project 2 has a computed net present value of $11,600 over a 6-year life. Project 1 could be sold at the end of 6 years for a price of $38,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 6% 10% 12% 15% Year 1 2 3 4 5 6 7 8 9 10 1 2 3 4 0.943 5 6 7 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.943 1.833 2.673 3.465 4.212 4.917 0.909 5.582 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 1.528 2.106 2.589 2.991 3.326 0.909 1.736 2.487 3.170 3.791 4.355 0.893 0.797 0.712 0.636 0.567 4.868 0.507 0.452 0.404 0.361 0.322 0.893 1.690 2.402 3.037 3.605 4.111 0.870 4.564 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.870 1.626 2.283 2.855 3.353 3.785 20% 4.160 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 3.605
Net present value-unequal lives Project 1 requires an original investment of $50,100. The project will yield cash flows of $10,000 per year for 8 years. Project 2 has a computed net present value of $11,600 over a 6-year life. Project 1 could be sold at the end of 6 years for a price of $38,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 6% 10% 12% 15% Year 1 2 3 4 5 6 7 8 9 10 1 2 3 4 0.943 5 6 7 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.943 1.833 2.673 3.465 4.212 4.917 0.909 5.582 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 1.528 2.106 2.589 2.991 3.326 0.909 1.736 2.487 3.170 3.791 4.355 0.893 0.797 0.712 0.636 0.567 4.868 0.507 0.452 0.404 0.361 0.322 0.893 1.690 2.402 3.037 3.605 4.111 0.870 4.564 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.870 1.626 2.283 2.855 3.353 3.785 20% 4.160 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 3.605
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 3BE
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