Vulcan Chemical is considering two capital investment proposals for plant-wide battery systems. Estimates regarding each project are provided below: Lithium Ion Nickle Cadmium Initial investment $200,000 $300,000 Annual net income 30,000 46,000 Net annual cash inflow 110,000 146,000 Estimated useful life 5 years 6 years Salvage value -0- -0- The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The cash payback period for Nickle Cadmium is: A. 6.65 years. B. 2.05 years. C. 2.5 years. D. 3.35 years. The net present value for Lithium Ion is: A. $217,010 B. $417,010 C. $335,830. D. $635,830. The annual rate of return for Lithium Ion is: A. 30.0%. B. 55%. C. 15.0%. D. 27.5%.
Vulcan Chemical is considering two capital investment proposals for plant-wide battery systems. Estimates regarding each project are provided below:
Lithium Ion Nickle Cadmium
Initial investment $200,000 $300,000
Annual net income 30,000 46,000
Net annual
Estimated useful life 5 years 6 years
Salvage value -0- -0-
The company requires a 10%
Present Value of an Annuity of 1
Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111
The cash payback period for Nickle Cadmium is:
The
The annual rate of return for Lithium Ion is:
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