Determine internal rate of return of each project

Assignment Help Managerial Accounting
Reference no: EM133001321

Dwight Donovan, the president of Walton 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 the project a are $116,000 and for project b are $50,000. the annual expected cash inflows are $45,826 for project A and $20,817 for project b. both investments are expected to provide cash flow benefits for the next three years. Walton enterprises' cost of capital is 6 percent. (PV of $1 and PVA of $1) compute the net present value of each project. which project should be adopted based on the net present value approach?

Problem A: Compute the net present value of each project. Which project should be adopted based on the net present value approach?

Problem B: Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?

Reference no: EM133001321

Questions Cloud

What is the latest time that annabelle can leave home : The meeting venue in Birmingham is a 5-minute walk from the station. What is the latest time that Annabelle can leave home, if she is to make it on time
Abnormal profit by trading the shares of gold : The market for Gold & Copper Ltd opens for trading at 10 am. On a particular day the first trade of Gold & Copper's share occurs at 10.15 am and the pri
Foreign exchange market of announcement : In response to a failing Turkish lira the President of Turkey Peep Tayyip Erdogan on May 11, 2018 called for lower interest rates and described interest rates a
What are the capital structure weights : Vital Pharmaco has 240,000 shares of common stock outstanding at a market price of $50 a share. Next year, Vital Pharmaco is expected to pay an annual dividend
Determine internal rate of return of each project : Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?
What is the intrinsic value per share today : Yesterday, Sour Grapes stock was selling for $36.32 and you purchased for $1.86 a call option on this stock. This option has a strike price of $30.42. Today, th
What is the present value : What is the present value of a $1,000 per year annuity for five years at an interest rate of 10%?
Identify three steps where can use audit software : Locate an audit work program of interest on Knowledge. Leader and identify 3 steps where you can use audit software to gather evidence.
Short sales of the australian equities : Compare and discuss the differences between the short sales of the Australian equities (AFTERPAY LTD and BHP GROUP LTD)and short sales of the American equities

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Evaluate the total contribution margin

Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume.

  Sedona company set the following standard costs

Sedona Company set the following standard costs for one unit of its product for 2013.

  What were johnson company common fixed costs for last year

What were Johnson Company's common fixed costs for last year?Johnson Company operates two plants: Plant A and Plant B. Johnson Company reported

  Determine the net present value and profitability index

Compute the net present value and profitability index of each project. McKnight Company is considering two different, mutually exclusive capital expenditure

  Compute indirect cost allocation rate per check processed

Assuming that there are only indirect costs and no direct costs, compute the average profit per account for retail customers and for business customers.

  Which the entry to close the income summary account

Which The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is

  What is the contribution margin per phone

What is the contribution margin per phone? What is the break-even point in phones? How many phones must be sold to earn pre-tax income of $7,500?

  Evaluate the incremental changes to cash flows

Evaluate the incremental changes to cash flows. You work as a finance manager for Drill Tech, Inc., a mid-sized manufacturing company located in Minnesota.

  Construct an income statement for the month of May

Construct an income statement for the month of May. Show all details. You can show three separate sub-schedules or one detailed income statement

  What is quantity demanded

Assume the government places a price ceiling at $7 in the market. What is quantity demanded? What is quantity supplied? Is there a shortage or a surplus

  What do prefer most - job costing or process costing

What do you prefer most: job costing or process costing. Include examples as you explain the reasons for your preference. Provide the suitable example.

  Determine the total interest expense for 2014

Determine the total interest expense for 2014 and Journalize the entry to record the amount of cash proceeds from the issuance of the bonds

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd