4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and Blogging. Data pertaining to the two projects are given as follows: Cost of equipment needed now Working capital investment needed now Annual cash operating inflows Salvage value of equipment in 5 years Blogging P80,000 23,000 6,000 Vlogging P80,000 18,000 Additional information: Both projects will have a useful life of 5 years; at the end of 5 years, the working capital investment will be eleased for use elsewhere. J.A.M.'s required rate of return is 12%. What is the net present value of project Blogging? Solution:

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Chapter1: Financial Statements And Business Decisions
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4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and
Blogging. Data pertaining to the two projects are given as follows:
Cost of equipment needed now
Working capital investment needed now
Annual cash operating inflows
Salvage value of equipment in 5 years
Blogging
P80,000
23,000
6,000
Vlogging
P80,000
18,000
Additional information:
Both projects will have a useful life of 5 years; at the end of 5 years, the working capital investment will be
released for use elsewhere. J.A.M.'s required rate of return is 12%.
What is the net present value of project Blogging?
Solution:
4
Transcribed Image Text:4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and Blogging. Data pertaining to the two projects are given as follows: Cost of equipment needed now Working capital investment needed now Annual cash operating inflows Salvage value of equipment in 5 years Blogging P80,000 23,000 6,000 Vlogging P80,000 18,000 Additional information: Both projects will have a useful life of 5 years; at the end of 5 years, the working capital investment will be released for use elsewhere. J.A.M.'s required rate of return is 12%. What is the net present value of project Blogging? Solution: 4
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