Homework Assignment #13Print ItemThere are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows:First YearSecond YearThird YearTotalAlpha Project$32,500$23,000$5,000$60,500Beta Project7,50024,00028,50060,000(Click here to see present value and future value tables)A. If the discount rate is 10%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places.Alpha Project $Beta Project $B. Which project should be recommended. < Principles of Accounting, Vol... T ime Value of MoneyE Table of contentsSearch this bookE My highlightsB PrintPresent Value of $1 Table1Factor =(1 + i)"Rate (i)1%2%3%5%8%10%12%15%20%10.9900.9800.9710.9520.9260.9090.8930.8700.8330.9800.9610.9430.9070.8570.8260.7970.7560.69430.9710.9420.9150.8640.7940.7510.7120.6580.57940.9610.9240.8880.8230.7350.6830.6360.5720.4820.9520.9060.8630.7840.6810.6210.5670.4970.4020.9420.8880.8370.7460.6300.5640.5070.4320.33570.9330.8710.8130.7110.5830.5130.4520.3760.27980.9240.8530.7890.6770.5400.4670.4040.3270.23390.9140.8370.7660.6450.5000.4240.3610.2840.194100.9050.8200.7440.6140.4630.3860.3220.2470.162110.8960.8040.7220.5850.4290.3500.2870.2150.135120.8880.7880.7010.5570.3970.3190.2570.1870.112130.8790.7730.6810.5300.3680.2900.2290.1630.093140.8610.7580.6610.5050.3400.2630.2050.1410.078150.8610.7430.6420.4810.3150.2390.1830.1230.065160.8530.7280.6230.4580.2920.2180.1630.1070.054170.8440.7140.6050.4360.2700.1980.1460.0930.045180.8360.7000.5870.4160.2500.1800.1300.0810.038(u) poļua

Formula: NPV = Present values of cash inflows - present values of cash outflows Deduction of present values of cash outflows from present values of cash inflows derives net present value.A ) Alpha project: NPV = Present values of cash inflows - present values of cash outflows = 52295.5 - 35000 = $ 17295.5 Hence, NPV for Alpha project is $ 17295.5 Beta project: NPV = Present values of cash inflows - present values of cash outflows = 48045 - 35000 = $ 13045 Hence, NPV for Beta project is $ 13045 B ) As Alpha project NPV is greater than Beta Project. So Alpha project is recommended.

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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $23,000 $5,000 $60,500 Beta Project 7,500 24,000 28,500 60,000 (Click here to see present value and future value tables) A. If the discount rate is 10%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $ Beta Project $ B. Which project should be recommended.

There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $23,000 $5,000 $60,500 Beta Project 7,500 24,000 28,500 60,000 (Click here to see present value and future value tables) A. If the discount rate is 10%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $ Beta Project $ B. Which project should be recommended.

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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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $23,000 $5,500 $61,000 Beta Project 8,000 23,000 28,000 59,000 (Click here to see present value and future value tables) https://openstax.org/books/principles-managerial-accounting/pages/time-value-of-money A. If the discount rate is 12%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project...? Beta Project...?
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