Question: help!! Net present value method, internal rate of return method, and analysis for a service company The management of Advanced Alternative Power Inc. is considering

help!!
Net present value method, internal rate of return method, and analysis for

Net present value method, internal rate of return method, and analysis for a service company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year 1 2 3 4 Wind Turbines $250,000 250,000 250,000 250,000 Biofuel Equipment $530,000 530,000 530,000 530,000 The wind turbines require an investment of $713,750, while the biofuel equipment requires an investment of $1,609,610. No residual value is expected from either project. Present Value Of an Annuity of $1 at Compound Interest Year 1 2 3 4 5 6 7 8 9 10 Required: 6% 0.943 1.833 2.673 3.465 4.212 4.917 .8 5.582 6.210 6.802 7.360 10% 0.909 1.736 2.487 3.170 3.791 4.355 6 4.868 5.335 5.759 6.145 12% 0.893 1.690 2.402 3.037 3.605 4.111 .564 4.564 4.968 5.328 5.650 15% 0.870 1.626 2.283 2.855 3.353 3.785 4 160 4.160 4.487 4.772 5.019 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.60 3.605 3.837 4.031 4.192 Ia. Compute the net present value for each project. use a rate of 10% and the present value of an annuity of $1 in the table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest whole dollar. Present value of annual net cash flows Amount to be invested Net present value Wind Turbines Biofuel Equipment 1b. Compute a present value index for each project. If required, round your answers to two decimal places. Present Value Index Wind Turbines Biofuel Equipment 2. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity Of $1 in the table above. If required, round your anewers to three decimal places and internal rate Of return to the nearest Wind Turbines Biofuel Equipment Present value of annual net cash flows Amount to be invested Net present value 1b. Compute a present value index for each project. If required, round your answers to two decimal places. Present Value Index Wind Turbines Biofuel Equipment . Determine the internal rate of return for each project by (a) computing a present value factor for an nnuity Of $1 and (b) using the present value Of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest whole percent. Present value factor for an annuity of $1 Internal rate Of return Wind Turbines Biofuel Equipment 3. The net present value, present value index, and internal rate of return all indicate that the although both investments meet the minimum return criterion of 10%.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!