Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of...

Transcribed Image Text:

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,700. Project 2 requires an initial investment of $100,800. Assume the company requires a 10% rate of return on its investments. (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Project 1 $ 108,900 Project 2 $ 85,800 72,800 35,840 19,100 20,160 8,960 22,400 $ 8,040 $ 7,400 Depreciation-Machinery Selling, general, and administrative expenses Income Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Present Value Present Value of Project 1 Net Cash Flows x of Annuity at = 10% Net Cash Flows value factor to 4 decimals. Round your answers to the nearest whole dollar.) Years 1-7 Present Value Project 1 Net Cash Flows x of Annuity at 10% Present Value of Net Cash Flows Book Net present value Hint rences Present Value Project 2 Net Cash Flows x of Annuity at 10% Years 1-5 Net present value = Present Value of Net Cash Flows Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,700. Project 2 requires an initial investment of $100,800. Assume the company requires a 10% rate of return on its investments. (PV of $1. FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Project 1 $ 108,900 Project 2 $ 85,800 72,800 35,840 19,100 20,160 8,960 22,400 $ 8,040 $ 7,400 Depreciation-Machinery Selling, general, and administrative expenses Income Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Present Value Present Value of Project 1 Net Cash Flows x of Annuity at = 10% Net Cash Flows value factor to 4 decimals. Round your answers to the nearest whole dollar.) Years 1-7 Present Value Project 1 Net Cash Flows x of Annuity at 10% Present Value of Net Cash Flows Book Net present value Hint rences Present Value Project 2 Net Cash Flows x of Annuity at 10% Years 1-5 Net present value = Present Value of Net Cash Flows