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?