9 Whispering Winds Company is considering two capital investment proposals. Estimates regarding each project are provided below:Project SoupProject Nuts$400000$60000044000Initial investmentAnnual net incomeNet annual cashinflowEstimated useful lifeSalvage valuePeriods5628000106000O 53.0%O 26.5%O 7.0%5 years14.0%0The company requires a 10% rate of return on all new investments.Present Value of an Annuity of 19% 10% 11%12%3.890 3.791 3.696 3.6054.486 4.355 4.231 4.111The annual rate of return for Project Soup is1300006 years0

Annual Rate of Return (ARR) refers to the percentage rate of return expected on average investment…

Whispering Winds Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts $400000 $600000 Initial investment Annual net income Net annual cash inflow Estimated useful life Salvage value 28000 6 106000 5 years O53.0 % O 26.5% 07.0% O 14.0% 0 Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is 44000 The company requires a 10% rate of return on all new investments. 130000 6 years 0

Whispering Winds Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts $400000 $600000 Initial investment Annual net income Net annual cash inflow Estimated useful life Salvage value 28000 6 106000 5 years O53.0 % O 26.5% 07.0% O 14.0% 0 Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is 44000 The company requires a 10% rate of return on all new investments. 130000 6 years 0

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Whispering Winds Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup
Project Nuts
$400000
$600000
44000
Initial investment
Annual net income
Net annual cash
inflow
Estimated useful life
Salvage value
Periods
5
6
28000
106000
O 53.0%
O 26.5%
O 7.0%
5 years
14.0%
0
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
9% 10% 11%
12%
3.890 3.791 3.696 3.605
4.486 4.355 4.231 4.111
The annual rate of return for Project Soup is
130000
6 years
0

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