Problem 16-19A

Please actually get this right - last guy got it completely wrong

PV of $1

PVA of $1

Dwight Donovan, the president of Zachary Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of three years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $115,000 and for Project B are $33,000. The annual expected cash inflows are $43,821 for Project A and $13,270 for Project B. Both investments are expected to provide cash flow benefits for the next three years. Zachary Enterprises' desired rate of return is 6 percent. (PV of \$1 and PVA of \$1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each project. Which project should be adopted based on the net present value approach? TABLE 1 PRESENT VALUE OF S TABLE 2 PRESENT VALUE OF AN ANNUITY OF 51