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please read the first direction on picture one, and answer on picture 2. thank you for your time.

please read the first direction on picture one, and answer on picture 2. thank you for your time.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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please read the first direction on picture one, and answer on picture 2. thank you for your time. 

Problem 26-1A a b Question 1 Average annual rate of return for both projects Net Present Value for Front-End Loader Net Present Value for Greenhouse Fixtures I %
Transcribed Image Text:Problem 26-1A a b Question 1 Average annual rate of return for both projects Net Present Value for Front-End Loader Net Present Value for Greenhouse Fixtures I %
PR26-1A Average rate of return method, net present value method, and analysis The capital investment committee of Nature's Portrait Landscaping Company is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows: 2 3 4 5 Total Front-End Loader Income from Year Operations 1 $25,000 20,000 7,000 3,000 1,250 $56,250 Instructions: Net Cash Flow $40,000 35,000 22,000 18,000 16,250 $131,250 Greenhouse Fixtures Income from Operations $11,250 11,250 11,250 11,250 11,250 $56,250 Net Cash Flow $26,250 26,250 26,250 26,250 26,250 $131,250 Each project requires an investment of $75,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. 1. Compute the following: a. The average rate of return for each investment. Round to one decimal point. b. The net present value for each investment. Use the present value of $1 table appearing in this chapter (Exhibit 2). Round present values to the nearest dollar.
Transcribed Image Text:PR26-1A Average rate of return method, net present value method, and analysis The capital investment committee of Nature's Portrait Landscaping Company is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows: 2 3 4 5 Total Front-End Loader Income from Year Operations 1 $25,000 20,000 7,000 3,000 1,250 $56,250 Instructions: Net Cash Flow $40,000 35,000 22,000 18,000 16,250 $131,250 Greenhouse Fixtures Income from Operations $11,250 11,250 11,250 11,250 11,250 $56,250 Net Cash Flow $26,250 26,250 26,250 26,250 26,250 $131,250 Each project requires an investment of $75,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. 1. Compute the following: a. The average rate of return for each investment. Round to one decimal point. b. The net present value for each investment. Use the present value of $1 table appearing in this chapter (Exhibit 2). Round present values to the nearest dollar.
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