Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $234,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net cash flowsProject C1Project C2Year 1$ 14,000$ 98,000Year 2110,00098,000Year 3170,00098,000Totals$ 294,000$ 294,000a. The company requires a 10% 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 10% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. The company requires a 10% return from its investments. Compute net present values using factors from Table B.1 inAppendix B to determine which projects, if any, should be accepted. (Negative net present values should be indicated with aminus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.)Project C1Year 1Year 2Year 3TotalsInitial investmentNet present valueProject C2Year 1Year 2Year 3TotalsNet Cash Flows X$14,000 X110,000 x170,000 x294,000$Net Cash Flows X$98,000 X98.000 x$98,000 X294,000Which projects, if any, should be acceptedPresent Valueof 1 at 10%Present Valueof 1 at 10%< Required A=====Present Value ofNet Cash Flows234,000Present Value ofNet Cash FlowsRequired B>

Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows) IRR is a rate at…

Answered: Phoenix Company is considering…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $234,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Net cash flows	Project C1	Project C2
Year 1	$ 14,000	$ 98,000
Year 2	110,000	98,000
Year 3	170,000	98,000
Totals	$ 294,000	$ 294,000

a. The company requires a 10% 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 10% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question.

The company requires a 10% 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. (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.)
Project C1
Year 1
Year 2
Year 3
Totals
Initial investment
Net present value
Project C2
Year 1
Year 2
Year 3
Totals
Net Cash Flows X
$
14,000 X
110,000 x
170,000 x
294,000
$
Net Cash Flows X
$
98,000 X
98.000 x
$
98,000 X
294,000
Which projects, if any, should be accepted
Present Value
of 1 at 10%
Present Value
of 1 at 10%
< Required A
=
=
=
=
=
Present Value of
Net Cash Flows
234,000
Present Value of
Net Cash Flows
Required B
>

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions