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Wellington Corporation estimates that it will have $500,000 available for capital investments next year. Half of this will be reserved for emergency projects and half will be invested in the most desirable projects from the following list. None of the investments has a residual value. Project Number Added Investment Expected After-Tax Cash Inflow Estimated Life of Project 6 years 4 15 1 2 3 4 5 $100,000 100,000 40,000 20,000 50,000 $25,000 30,000 5,000 10,000 12,500 23

Wellington Corporation estimates that it will have $500,000 available for capital investments next year. Half of this will be reserved for emergency projects and half will be invested in the most desirable projects from the following list. None of the investments has a residual value. Project Number Added Investment Expected After-Tax Cash Inflow Estimated Life of Project 6 years 4 15 1 2 3 4 5 $100,000 100,000 40,000 20,000 50,000 $25,000 30,000 5,000 10,000 12,500 23

FINANCIAL ACCOUNTING
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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Rank the projects in order of their desirability 

Wellington Corporation estimates that it will have $500,000 available for capital investrnents next year. Half of this will be reserved for emergency projects and half will be invested in the most desirable projects from the following list. None of the investments has a residual value. Project Number Added Investment Expected After-Tax Cash Inflow Estimated Life of Project 1 $100,000 100,000 40,000 20,000 50,000 $25,000 30,000 5,000 10,000 12,500 6 years 4 15 2 -23 45
Transcribed Image Text:Wellington Corporation estimates that it will have $500,000 available for capital investrnents next year. Half of this will be reserved for emergency projects and half will be invested in the most desirable projects from the following list. None of the investments has a residual value. Project Number Added Investment Expected After-Tax Cash Inflow Estimated Life of Project 1 $100,000 100,000 40,000 20,000 50,000 $25,000 30,000 5,000 10,000 12,500 6 years 4 15 2 -23 45
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