Use the NPV method to determine whether KayElle Products should invest in the following projects: • Project A: Costs $300,000 and offers 8 annual net cash inflows of $62,000. KayElle Products requires an annual return of 16% on investments of this nature. • Project B: Costs $350,000 and offers 9 annual net cash inflows of $76,000. KayElle Products demands an annual return of 14% on investments of this nature. Read the requirements. View Present Value of $1 table. Present Value of Ordinary Annuity of $1 table. Calculate the NPV of Project B. Project B: Years 1-9 Present value of annuity 0 Investment Net Cash Inflow Annuity PV Factor (i=14%, n=9) Present Value Net present value of Project B Requirement 2. What is the maximum acceptable price to pay for each project? Maximum Acceptable Price
Use the NPV method to determine whether KayElle Products should invest in the following projects: • Project A: Costs $300,000 and offers 8 annual net cash inflows of $62,000. KayElle Products requires an annual return of 16% on investments of this nature. • Project B: Costs $350,000 and offers 9 annual net cash inflows of $76,000. KayElle Products demands an annual return of 14% on investments of this nature. Read the requirements. View Present Value of $1 table. Present Value of Ordinary Annuity of $1 table. Calculate the NPV of Project B. Project B: Years 1-9 Present value of annuity 0 Investment Net Cash Inflow Annuity PV Factor (i=14%, n=9) Present Value Net present value of Project B Requirement 2. What is the maximum acceptable price to pay for each project? Maximum Acceptable Price
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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