### Present Value of an Annuity of $1 at Compound Interest| Year | 6% | 10% | 12% | 15% | 20% ||------|-----|-----|-----|-----|-----|| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 || 2 | 1.833 | 1.736 | 1.690 | 1.626 | 1.528 || 3 | 2.673 | 2.487 | 2.402 | 2.283 | 2.106 || 4 | 3.465 | 3.170 | 3.037 | 2.855 | 2.589 || 5 | 4.212 | 3.791 | 3.605 | 3.353 | 2.991 || 6 | 4.917 | 4.355 | 4.111 | 3.785 | 3.326 || 7 | 5.582 | 4.868 | 4.564 | 4.160 | 3.605 || 8 | 6.210 | 5.335 | 4.968 | 4.487 | 3.837 || 9 | 6.802 | 5.759 | 5.328 | 4.772 | 4.031 || 10 | 7.360 | 6.145 | 5.650 | 5.019 | 4.192 |---### Instructions:1. **Compute Net Present Value (NPV) for Each Project**: - Use the above table to determine the present value of the unequal lives of the projects. - Ignore the unequal lives if not applicable. - Round the results to the nearest dollar, if required.### Office Expansion vs. Servers Upgrade| | Office Expansion | Servers Upgrade ||-------------------------|------------------|-----------------|| Present value of annual net cash flows | $513,875 | $501,105 || Amount to be invested | $490,000 | $490,000 || **Net Present Value** | **$23,875** ✔️ | ** ### Sentry Insurance Co. Investment AnalysisThe investment committee of Sentry Insurance Co. is assessing two projects: office expansion and server upgrades. Both projects necessitate an investment of $490,000 but yield varying net cash flows over different timeframes.#### Estimated Net Cash FlowsThe estimated annual net cash flows from each project are detailed below:| Year | Office Expansion | Servers ||------|------------------|---------|| 1 | $125,000 | $165,000|| 2 | $125,000 | $165,000|| 3 | $125,000 | $165,000|| 4 | $125,000 | $165,000|| 5 | $125,000 | || 6 | $125,000 | |To facilitate the net present value (NPV) analysis, the committee has chosen a discount rate of 12%. Additionally, while the residual value at the end of each project's useful life is considered to be $0, the office expansion's residual value at the end of the fourth year is projected to be $180,000.#### Present Value of $1 at Compound InterestThe table below shows the present value of $1 at various compound interest rates over a range of years:| Year | 6% | 10% | 12% | 15% | 20% ||------|------|------|------|------|------|| 1 | 0.943| 0.909| 0.893| 0.870| 0.833|| 2 | 0.890| 0.826| 0.797| 0.756| 0.694|| 3 | 0.840| 0.751| 0.712| 0.658| 0.579|| 4 | 0.792| 0.683| 0.636| 0.572| 0.482|| 5 | 0.747| 0.621| 0.567| 0.497| 0.402|| 6 | 0.705| 0.564| 0.507| 0.432| 0.335|| 7 |

Cost of capital: Cost of capital is known as the cost of expending for certain purchases of fixed…

Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 2 3 4 5 6 7 8 D 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5 750 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 0.870 1.626 2.283 2.855 3.353 3.785 4.160 4.487 4.772 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4. 031

Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 2 3 4 5 6 7 8 D 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5 750 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 0.870 1.626 2.283 2.855 3.353 3.785 4.160 4.487 4.772 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4. 031

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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Solve by hand parts a,b,c, and D
ital investment committee of Iguana Inc. is considering two capital investments. The estimated ig income and net cash flows from each investment are as follows: Year Robotic Assembler ng Income Robotic Assembler Net Cash Flow Warehouse Operating Income Warehouse Net Cash 35,000 $65,000 $21,000 $ 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 05,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line ation will be used, and no residual value is expected. The committee has selected a rate of 12% for s of the net present value analysis. Present Value of $1 at Compound Interest Year 12% 15% 20% 10.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.68: d: 1a. Compute the average rate of return for each investment. If required, round your answer to one place. Investment Committee Average Rate of Return Robotic Assembler % Warehouse %…
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The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $48,000 $152,000 $101,000 $243,000 2 48,000 152,000 77,000 205,000 3 48,000 152,000 38,000 144,000 4 48,000 152,000 17,000 99,000 5 48,000 152,000 7,000 69,000 Total $240,000 $760,000 $240,000 $760,000 Each project requires an investment of $480,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8…
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Question list ✔Question 1 Data table A 1 2 Projected cash outflow 3 Net initial investment 4 Projected cash inflows 5 Year 1 6 Year 2 7 Year 3 8 Year 4 9 Required rate of return ↑ Lulus Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lyssa Bickerson, staff analyst at Lulus, is preparing an analysis of the three projects under consideration by Caden Lulus, the company's owner. (Click the icon to view the data for the three projects.) Present Value of $1 table Read the requirements. B Project A с Project B Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table D Project C $ 6,000,000 $ 4,000,000 $8,000,000 8% $ 2,050,000 $ 1,100,000 $4,700,000 2,050,000 2,300,000 4,700,000 2,050,000 700,000 50,000 2,050,000 25,000 8% 8% Requirements 1. Because the company's cash is limited, Lulus thinks the payback method should be used to…
he capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $50,400 $157,000 $106,000 $251,000 2 50,400 157,000 81,000 212,000 3 50,400 157,000 40,000 149,000 4 50,400 157,000 18,000 102,000 5 50,400 157,000 7,000 71,000 Total $252,000 $785,000 $252,000 $785,000 Each project requires an investment of $480,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8…
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Porter Company is analyzing two potential investments Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Project X Project Y $ 75,900 $ 64,000 26,000 26,000 26,000 4,400 28,000 28,000 20,000 If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? 0