The following information relates to the two investment proposals offered to H & M Company. The...
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The following information relates to the two investment proposals offered to H & M Company. The company requires a 10% return from its investments. Initial Investment Expected net cash flows: a. Year 1 Year 2 Year 3 The following table value is provided for computing the net present value of the cash flows. b. C. Periods Project A $(160,000) $40,000 $56,000 $128,000 Year 1 Year 2 Year 3 Project B $(110,000) $32,000 $50,000 $66,000 Required: (Show all calculations and round ALL answers to 2 decimal places.) The Present Value of 1 at 10% 0.9091 0.8264 0.7513 Based on your calculation with the Payback method, which project would you choose? Assume the expected net cash flows are received evenly within each year. (8 marks) Based on your calculation with the Net Present Value method, which project would you choose? Assume the expected net cash flows occur at end of each year. (8 marks) If the company has money sufficient for one project only, which project would you suggest to the company and explain your choice? (3 marks) The following information relates to the two investment proposals offered to H & M Company. The company requires a 10% return from its investments. Initial Investment Expected net cash flows: a. Year 1 Year 2 Year 3 The following table value is provided for computing the net present value of the cash flows. b. C. Periods Project A $(160,000) $40,000 $56,000 $128,000 Year 1 Year 2 Year 3 Project B $(110,000) $32,000 $50,000 $66,000 Required: (Show all calculations and round ALL answers to 2 decimal places.) The Present Value of 1 at 10% 0.9091 0.8264 0.7513 Based on your calculation with the Payback method, which project would you choose? Assume the expected net cash flows are received evenly within each year. (8 marks) Based on your calculation with the Net Present Value method, which project would you choose? Assume the expected net cash flows occur at end of each year. (8 marks) If the company has money sufficient for one project only, which project would you suggest to the company and explain your choice? (3 marks)
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