Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

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Answer 1

Question

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

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L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. Question:

L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: 1. Assume there is a 7% sales tax rate in Ohio, where the customer who ordered the boots is located. The sales tax on the order would be $7.63, which L.L. Bean adds to the invoice total. Is the $7.63 added to L.L. Bean's sales revenue? Why or why not?

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Answer 2

Question

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

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Answer 3

Question

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

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Answer 4

Question

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

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Answer 5

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

Answer 6

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

Answer 7

Chapter 26, Problem 5PB

1.

To determine

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

Answer 8

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

Answer 9

2.

To determine

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

Answer 10

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

Answer 11

3.

To determine

Prepare the report the merits of the two investments to the capital investment committee.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 26 - What are the principal objections to the use of...Ch. 26 - Discuss the principal limitations of the cash...Ch. 26 - Why would the average rate of return differ from...Ch. 26 - Prob. 4DQ Ch. 26 - Prob. 5DQ Ch. 26 - Prob. 6DQ Ch. 26 - Prob. 7DQ Ch. 26 - Two projects have an identical net present value...Ch. 26 - Prob. 9DQ Ch. 26 - What are the major disadvantages of the use of the...

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

Solution Summary: The author calculates the net present value of Wichita and Topeka, ignoring the unequal lives of the projects.

Identify the net present value of each investment, using the present value of $1 table in Exhibit 5, ignoring the unequal lives of the project.

Calculate the net present value of each project assuming the office expansion is adjusted to a four year life, using the present value of $1 table in Exhibit 2.

Prepare the report the merits of the two investments to the capital investment committee.

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Chapter 26 Solutions