Capital Investment Decision: Net Present Value Method E11A.

Assume the same facts for Full Service Station as in E10A, except that the com- pany requires a 20 percent minimum rate of return. Using the net present value method, prepare an analysis to determine whether the company should purchase the equipment. (Hint: Use Tables 1 and 2 in Appendix B.)

E10A

Capital Investment Decision: Net Present Value Method E10A. Accounting Connection ?

Full Service Station is planning to invest in auto- matic car wash equipment valued at $210,000. The owner estimates that the equipment will increase annual net cash inflows by $40,000. The equipment is expected to have a ten- year useful life with an estimated residual value of $20,000. The company requires a 14 percent minimum rate of return. Using the net present value method, prepare an analysis to determine whether the company should purchase the equipment. How important is the estimate of residual value to this decision? (Hint: Use Tables 1 and 2 in Appendix B.)

Please use the same format as E-11B which is provided here. Please use a Word document to complete this assignment.

Capital Investment Decision: Net Present Value Method E11B. Assume the same facts for H and Y Service Station as in E10B except that the company requires a 20 percent minimum rate of return. Using the net present value method, prepare an analysis to determine whether the company should purchase the equipment. (Hint: Use Tables 1 and 2 in Appendix B.)

E11B. Capital Investment Decision: Net Present Value Method
			Net