Use the NPV method to determine whether Vargas Products should invest in the following projects: • Project A costs $290,000 and offers seven annual net cash inflows of $65,000. Vargas Products requires an annual return of 16% on projects like A. • Project B costs $375,000 and offers ten annual net cash inflows of $68,000. Vargas Products demands an annual return of 12% on investments of this nature. |(Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is $ (27,465) The NPV of Project B is 2$ 9,200 Now calculate the maximum acceptable price to pay for each project. (Round your answers to the nearest whole dollar.) Project A is

Use the NPV method to determine whether Vargas Products should invest in the following projects: • Project A costs $290,000 and offers seven annual net cash inflows of $65,000. Vargas Products requires an annual return of 16% on projects like A. • Project B costs $375,000 and offers ten annual net cash inflows of $68,000. Vargas Products demands an annual return of 12% on investments of this nature. |(Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV of Project A is $ (27,465) The NPV of Project B is 2$ 9,200 Now calculate the maximum acceptable price to pay for each project. (Round your answers to the nearest whole dollar.) Project A is

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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