Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of...
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Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $294,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Project C1 Project C2 Year 1 Year 2 Year 3 Totals $ 34,000 130,000 190,000 $ 118,000 118,000 118,000 $ 354,000 $ 354,000 a. The company requires a 9% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 9% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 9% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Project C1 Year 1 Net Cash Flows x Present Value of 1 at 9% Present Value of Net Cash Flows Year 2 = Year 3 Totals $ 0 Present Value Project C2 Net Cash Flows x of 1 at 9% Year 1 Year 2 Year 3 = Totals $ 0 Which projects, if any, should be accepted Present Value of Net Cash Flows < Required A Required B > Show less Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $294,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Project C1 Project C2 Year 1 Year 2 Year 3 Totals $ 34,000 130,000 190,000 $ 118,000 118,000 118,000 $ 354,000 $ 354,000 a. The company requires a 9% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 9% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 9% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Project C1 Year 1 Net Cash Flows x Present Value of 1 at 9% Present Value of Net Cash Flows Year 2 = Year 3 Totals $ 0 Present Value Project C2 Net Cash Flows x of 1 at 9% Year 1 Year 2 Year 3 = Totals $ 0 Which projects, if any, should be accepted Present Value of Net Cash Flows < Required A Required B > Show less
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Answer rating: 100% (QA)
Answer Lets start by computing the net present values NPVs for Project C1 and Project C2 using a 9 d... View the full answer
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