- Garcia Company Can Invest In One Of Two Alternative Projects Project Y Requires A 360 000 Initial Investment For New M 1 (53.8 KiB) Viewed 11 times
- Garcia Company Can Invest In One Of Two Alternative Projects Project Y Requires A 360 000 Initial Investment For New M 2 (53.19 KiB) Viewed 11 times
- Garcia Company Can Invest In One Of Two Alternative Projects Project Y Requires A 360 000 Initial Investment For New M 3 (54.86 KiB) Viewed 11 times
- Garcia Company Can Invest In One Of Two Alternative Projects Project Y Requires A 360 000 Initial Investment For New M 4 (51.52 KiB) Viewed 11 times
Garcia Company can invest in one of two alternative projects. Project Y requires a $360,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $360,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Project Y $ 400,000 Project 2 $ 500,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) 190,000 90,000 50,000 200,000 120,000 Depreciation Machinery Selling, general, and administrative expenses 50,000 Income $70,000 $ 130,000 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 8% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: 7 Project Y Project Z Payback period 0 0 If the company bases investment decisions solely on payback period, which project will it choose? < Required 1 Required 3 >
Garcia Company can invest in one of two alternative projects. Project Y requires a $360,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $360,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounta Project Y $ 400,000 Project z $ 500,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) 190,000 200,000 Depreciation-Machinery 90,000 120,000 50,000 50,000 Selling, general, and administrative expenses Income $ 70,000 $ 130,000 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases Investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 8% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Accounting Rate of Return. Numerator: 1 Denominator: " Project Y Accounting rate of return 0 Project Z 0 If the company bases investment decisions solely on accounting rate of return, which project will it choose? < Required 2 Required 4 >
$1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Project Y $ 400,000 Project 2 $500,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) 190,000 90,000 50,000 200,000 120,000 Depreciation Machinery Selling, general, and administrative expenses 50,000 Income $ 70,000 $ 130,000 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 8% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute each project's net present value using 8% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) Project Y Net Cash Flows Present Value of Annuity at 8% Present Value of Net Cash Flows Years 1-4 Net present value Project Z Net Cash Flows Present Value of Annuity at 8% Present Value of Net Cash Flows Years 1-3 .. S 0 Net present value If the company bases investment decisions solely on net present value, which project will it choose?