Exercise 13-7 Comparison of Projects Using Net Present Value [LO1]

Mitchell Company has $30,000 to invest and has two alternative uses of the funds, as shown below. Mitchell Company uses an 8% discount rate:

Invest in

Project AlphaInvest in

Project BetaInvestment required$30,000$30,000Annual cash inflows$8,000$ 0Single cash inflow at the end of 10 years$120,000Life of the project10 years10 years

Ignore income taxes.

Required:

a.Determine the net present value. (Hint: Use Microsoft Excel to calculate the discount factor(s).)(Do not round intermediate calculations and round your final answers to the nearest dollar amount.)

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Exercise 13-7 Comparison of Projects Using Net Present Value [L01] Mitchell Company has $30,000 to invest and has two alternative uses of the funds, as shown below. Mitchell Company uses an 8% discount rate: Invest in Invest in Project AlphaProject Beta Investment required $30, 000 $ 30, 000 Annual cash inflows $ 8,000 $ 0 Single cash inflow at the end of 10 years $120, 000 Life of the project 10 years 10 years lg nore income taxes. Required: a. Determine the net present value. (Hint. Use Microsoft Excel to calculate the discount factor(s).) (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)