Chapter 26 - Homework Back Show Me How Average rate of return method, net present value method, and analysis for a service company 1. EX.26.01.ALG The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: 2. EX.26.05.ALGO Warehouse Robotic Assembler Robotic Assembler Operating Warehouse 3. EX.26.06 Year Operating Income Net Cash Flow Income Net Cash Flow 1. EX.26.14.ALGO $48,000 $148,000 $101,000 $237,000 2 48,000 146,000 77,000 200,000 5. EX.26.17.ALGO 3 18,000 148,000 35,000 141,000 8. PR.26.01A.ALGO 48,000 148,000 17,000 96,000 5 8,000 148,000 7,000 56,000 7. MAD.26.03 Total $240,000 $740,DO0 $240,000 740,000 8. CMA. 26.04 Each project requires an investment of $480,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.79 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 D.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 1.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 9 0.597 0.424 0.361 0.284 0.194 10 0.558 0.386 0.32 0.247 0.162 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Robotic Assembler Warehouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Robotic Assembler Warehouse Present value of net cash flow Amount to be invested Check My Work 3 more Check My Work uses remaining. Previous Next Progress: 6/8 items Assignment Score: 0.09% All work saved. Save and Exit Submit Assignment for GradingChapter 26 - Homework &Book Show Me How rear Operating Income Net Cash Flow Income Net Cash Flow 1. EX.26.01.ALG $48,000 $148,000 $101,000 $237,000 2. EX.26.05.ALGO 48,000 146,000 77,000 200,000 18,000 148,D00 36,000 141,000 W 3. EX.26.06 48,000 148,000 17,000 96,000 5 8,000 148,D00 7,000 56,000 1. EX.26.14.ALGO Total $240,000 $740,000 $240,000 $740,000 5. EX.26.17.ALGO 8. PR.26.01A.ALGO Each project requires an investment of $480,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Present Value of $1 at Compound Interest 7. MAD.26.03 Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 8. CMA. 26.04 0.890 0.826 0.797 0.756 0.694 W 0.840 0.751 0.71 0.656 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.74 0.621 0.56 0.497 0.402 0.705 0.56 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 0.597 0.424 0.36 0.284 0.194 0.558 0.386 0.322 0.247 0.162 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Robotic Assembler Warehouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Robotic Assembler Warehouse Present value of net cash flow Amount to be invested Net present value 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments. The robotic assembler has a net present value because cash flows occur in time compared to the warehouse. Thus, if only one of the two projects can be accepted, the would be the more attractive. Progress: 6/8 items Check My Work 3 mare Check My Work uses remaining. Previous Next Assignment Score: 0.09% All work saved. Save and Exit Submit Assignment for Grading