Question: Calculate NPVrank projects using present value ratios. The following capital expenditure projects have been proposed for managements consideration at Scott, Inc., for the upcoming budget
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Required:
a. Calculate the net present value of projects B, C, and D, using 10% as the cost of capital for Scott, Inc.
b. Calculate the present value ratio for projects B, C, D, and E.
c. Which projects would you recommend for investment if the cost of capital is
10% and
1. $200,000 is available for investment?
2. $600,000 is available for investment?
3. $1,000,000 is available for investment?
d. What additional factors (beyond those considered in parts ac might influence your projectrankings?
Project Years A investment0 (100,000) $(00,000) (200,000) $200,000) S(400,000) Amount of net cash retum1 17,000 17,000 17,000 32,000 17,000 32.000 7000 32,000 58.000 58,000 58,000 58,000 58,000 18,000 05.000 36,000 05,000 52,000 52,000 52,000 52,000 54,000 72,000 90,000 6-10 000 20,000 NPV (10%
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a Project B Initial investment 100000 Present value of net cash return by years Years 35 32000 07513 06830 06209 65766 Year 610 20000 61446 37908 4707... View full answer
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