Alfarsi industries uses the net present value method

Assignment Help Accounting Basics

Reference no: EM131023126

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,300 and will produce cash flows as follows:

End of Year	Investment
End of Year	A	B
1	$8,300	$0
2	8,300	0
3	8,300	24,900

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment A is:

Answers:

$16,372.

$(15,300).

$9,600.

$(18,951).

$3,651.

Reference no: EM131023126

Questions Cloud

What caused this change in the sources of mortgage finance : An article in a Federal Reserve publication observes that "20 or 30 years ago, local financial institutions were the only option for some borrowers. Today, borrowers have access to national (and even international) sources of mortgage finance." Wh..

Sources of panama growth : Judging from the experience of Singapore, if Panama is to maintain these high growth rates, what needs to be true about the sources of Panama's growth?

What does the article mean by credit availability : A newspaper article in the fall of 2007 stated that: "The luxury-home builder Hovnanian Enterprises reported its fourth consecutive quarterly loss on Thursday, citing continuing problems of credit availability and high inventory." Why was Hovnania..

Cause of low russian productivity : What factors would cause Russian labor productivity to be a third of U.S. labor productivity? The article notes that one cause of low Russian productivity is "just bad management." Why might Russian businesses suffer from bad management?

Alfarsi industries uses the net present value method : Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments.

Riskness and relative uncertainty of cash flows : Highland mining and minerals Co. is considering the purchase of two gold mines. Only one investment will be made. The australian gold mine will cost $1,649,000 and will produce $353,000 per year in years 5 through 15 and $503,00 per year in years 16 ..

According to the constant perpetual growth model : Trust Bankers just paid an annual dividend of $1.9 per share. The expected dividend growth rate is 6.1 percent, the discount rate is 12 percent, and the dividends will last for 18 more years. What is the value of the stock? A share of stock just paid..

Managerial positions execute strategies and best practices : Managerial positions execute strategies and best practices on the job in an effort to ensure the annual auditor's report is unqualified. identify the elements in an auditor's report that are needed for an organization in the United States. How does a..

Research equipment and certain special tools : In your new position as head accountant (so OK – you’re the only accountant but it will sound better on your resume) working for Mr. Moore, you note that last month on July 2, 2013, they bought “research equipment and certain special tools” for $60,0..

User Account

All Pages