0 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0
0 46000 Net annual cash inflow 110000 146000 Estimated useful life 5 years 6 years Salvage value 0 0
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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Question
Wildhorse Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup | Project Nuts | |||
Initial investment | $340000 | $420000 | ||
Annual net income | 30000 | 46000 | ||
Net annual |
110000 | 146000 | ||
Estimated useful life | 5 years | 6 years | ||
Salvage value | 0 | 0 |
The company requires a 10%
Present Value of an Annuity of 1 | ||||
Periods | 9% | 10% | 11% | 12% |
5 | 3.89 | 3.791 | 3.696 | 3.605 |
6 | 4.486 | 4.355 | 4.231 | 4.111 |
The
A. $70000.
B. $635830.
C. $215830.
D. $260206.
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