Exercise 11 8 Net Present Value Analysis of Two Alternatives [LO1]
| Wriston Company has $400,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows: Don't use plagiarized sources. Get Your Custom Essay on accounting excercise 11 8 421250 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page |
| A | B | |||
| Cost of equipment required | $ | 400,000 | $ | 0 |
| Working capital investment required | $ | 0 | $ | 400,000 |
| Annual cash inflows | $ | 76,000 | $ | 65,000 |
| Salvage value of equipment in five years | $ | 18,000 | $ | 0 |
| Life of the project | 5 years | 5 years | ||
| | ||||
| The working capital needed for project B will be released for investment elsewhere at the end of five years. Wriston Company uses a 10% discount rate. (Ignore income taxes.) |
| Click here to view Exhibit 11B 1 andExhibit 11B 2, to determine the appropriate discount factor(s) using tables. |
| Required: |
| a. | Calculate net present value for each project. (Negative amounts should be indicated by a minus sign.Leave no cells blank be certain to enter “0” wherever required. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answers to the nearest whole dollar.) |
| Net Present Value | |
| Project A | $ |
| Project B | $ |
| | |
| b. | Which investment alternative (if either) would you recommend that the company accept? | ||||
|
part one For this assignment you are to to watch: Shattered Glass Write a two…
Standard Project - WebServers. Instruction attached. Need all requirements, you do not have to make…
Read classmates post and respond with 100 words:The International Categorization of Diseases, Tenth Revision, Clinical…
Most Americans have at least 1 issue that is most important to them. Economic issues…
For this assignment, you are the court intake processor at a federal court where you…
Use a standard outline format to lay out how you are going to write your…