Question: Please complete the table (part 2a), with % factor, PV, and NPV, and please explain the process. Also, 2b, 3a, and 3b please. I need

Please complete the table (part 2a), with % factor, PV, and NPV, and please explain the process. Also, 2b, 3a, and 3b please. I need to check my work. Thanks!

Situation:Dogs R Us is considering two investment opportunities.
Use the following information to compute the (a) net present value and (b) project profitability index for two potential capital budgeting projects.
Project A Project B
Cost of equipment: $114,000 Cost of equipment: $279,000
Working capital investment required: $28,000 Working capital investment required: $39,000
Annual cash inflows: $ 21,000 Annual cash inflows: $51,853
Salvage value of equipment in 12 years $14,000 Salvage value of equipment in 10 years $ 18,000
Life of the project 12 years Life of the project 10 years
The company's required rate of return for all projects is 11%.
At the end of each project, the working capital will be released.
(a) Compute the net present value of the projects. Round any decimals to the nearest dollar. Should each project be accepted?
Years Cash Flows % Factor PV Years Cash Flows % Factor PV
Cost of equipment Now (114,000) Cost of equipment Now (279,000)
Working capital required Now (28,000) Working capital required Now (39,000)
Annual net cash receipts 1-12 21,000 Annual net cash receipts 1-10 51,853
Salvage value of equipment 12 14,000 Salvage value of equipment 10 18,000
Working capital released 12 28,000 Working capital released 10 39,000
NPV NPV
(b) Compute the project profitability index for each investment opportunity. Where necessary, carry computations to two decimal places. Which project is more desirable and why?
Part 3:
Situation:Dogs R Us is considering two investment opportunities.
Use the following information to compute the internal rate of return for two potential capital budgeting projects.
Project A Project B
Cost of equipment: $41,258 Cost of equipment: $53,582
Annual cash inflows: $9,807 Annual cash inflows: $11,550
Each machine would have an 8 year useful life and no salvage value. The company has a minimum required rate of return of 11%.
a. Compute the internal rate of return.
Project A: Internal Rate of Return = Project B: Internal Rate of Return =
b. Would the company be willing to accept either of these projects? Explain.

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!