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Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Required A Required B Project C1 Year 1 Year 2 Year 3 $ 282,000 Complete this question by entering your answers in the tabs below. Totals Project C2 Year 1 Year 2 Year 3 The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Totals Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Show less A Net Cash Flows Project C2 $ $ 94,000 94,000 94,000 $ 282,000 Net Cash Flows $ Which projects, if any, should be accepted 0 0 X X Present Value of 1 at 12% Present Value of 1 at 12% < Required A = = = Present Value of Net Cash Flows Present Value of Net Cash Flows Required B >

Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Required A Required B Project C1 Year 1 Year 2 Year 3 $ 282,000 Complete this question by entering your answers in the tabs below. Totals Project C2 Year 1 Year 2 Year 3 The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Totals Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Show less A Net Cash Flows Project C2 $ $ 94,000 94,000 94,000 $ 282,000 Net Cash Flows $ Which projects, if any, should be accepted 0 0 X X Present Value of 1 at 12% Present Value of 1 at 12% < Required A = = = Present Value of Net Cash Flows Present Value of Net Cash Flows Required B >

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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Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Required A Project C1 Project C1 Year 1 Year 2 Year 3 $ 10,000 106,000 166,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Totals Complete this question by entering your answers in the tabs below. Project C2 Year 1 Year 2 Year 3 282,000 Totals $ Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Show less Net Cash Flows $ Project C2 $ 94,000 94,000 94,000 $ 282,000 Net Cash Flows $ Which projects, if any, should be accepted 0 X X Present Value of 1 at 12% Present Value of 1 at 12% < Required A Present Value of Net Cash Flows Present Value of Net Cash Flows Required B >
Transcribed Image Text:Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Required A Project C1 Project C1 Year 1 Year 2 Year 3 $ 10,000 106,000 166,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Totals Complete this question by entering your answers in the tabs below. Project C2 Year 1 Year 2 Year 3 282,000 Totals $ Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Show less Net Cash Flows $ Project C2 $ 94,000 94,000 94,000 $ 282,000 Net Cash Flows $ Which projects, if any, should be accepted 0 X X Present Value of 1 at 12% Present Value of 1 at 12% < Required A Present Value of Net Cash Flows Present Value of Net Cash Flows Required B >
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