Pitt Company is considering twoalternative investments. The companyrequires a 12% return from itsinvestments. Neither option has asalvage value.Project XProject YInitial investment$180,000$118,000Net cash flows anticipated:Year 182,00059,00092,00081,00076,00035,00055,00072,00068,00027,000Year 2Year 3Year 4Year 5Calculate the Net PresentValue for each project andindicate which the PittCompany should choose.

The net present value is used to evaluate the present value of the cash flows at the required rate…

Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $180,000 $118,000 Net cash flows anticipated: 35,000 55,000 72,000 68,000 27,000 Year 1 82,000 59,000 92,000 81,000 76,000 Year 2 Year 3 Year 4 Year 5 Calculate the Net Present Value for each project and indicate which the Pitt Company should choose.

Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $180,000 $118,000 Net cash flows anticipated: 35,000 55,000 72,000 68,000 27,000 Year 1 82,000 59,000 92,000 81,000 76,000 Year 2 Year 3 Year 4 Year 5 Calculate the Net Present Value for each project and indicate which the Pitt Company should choose.

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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