Solution-Lowasugar project and the boostametabol project

Lowasugar project and the boostametabol project

Reference no: EM133113235

. PopEar Chicken is considering two potential projects, The Management Team under Jane has decided to present the cash flows from two recent proposals: the Lowasugar project and the Boostametabol project. All figures are in thousands of dollars:

Time of Cash Flow	Lowasugar	Boostametabol
Investment	-$17,500	-$15,500
Year 1	2,000	7,000
Year 2	3,700	5,500
Year 3	6,250	3,075
Year 4	7,000	3,200
Year 5	4,000	2,000

State and explain the decision rule behind the NPV method.
Compute the net present value (NPV) for each project by using a discount rate of 8.79% for projects of average risk.
Which of the two projects is more profitable?

Rate	8.79%
Time of	Lowasugar			Boostametabol
Cash Flow Years	Lowasugar (A)	FV	PV	Boostametabol (B)	FV	PV
0	($17,500)	($17,500)	($17,500)	($15,500)	($15,500)	($15,500)
1	2,000	2,176	$1,838	7,000	7,615	$7,000
2	3,700	4,379	$3,126	5,500	6,509	$5,500
3	6,250	8,047	$4,854	3,075	3,959	$3,075
4	7,000	9,805	$4,997	3,200	4,482	$3,200
5	4,000	6,095	$2,625	2,000	3,048	$2,000
	$5,450	$30,503	$17,441	$5,275	$10,114	$20,775

NPV	$13,391.60			$17,066.76
Initial Outlay	($17,500)			($15,500)
	($4,108.40)			$1,566.76

Reference no: EM133113235

Questions Cloud

Prepare the journal entries to record the issuance of bonds : Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1, 2021

Defined benefit pension in retirement : You are currently 22 years old and just starting your first "grown up" job after college, earning $44,000 per year. Since you took this class, you know how imp

Prepare the journal entries to record the purchase of bonds : Prepare the journal entries to record the purchase of the bonds by Saxton-Bose on January 1, 2021, interest revenue on June 30, 2021

Uncovered interest rate parity equation : According to the uncovered interest rate parity equation, Euro is expected to |:| against US. dollar. (Drag and drop the answer to the box)

Lowasugar project and the boostametabol project : . PopEar Chicken is considering two potential projects, The Management Team under Jane has decided to present the cash flows from two recent proposals: the

Describe inherent limitations of internal control system : Identifying and Assessing The Risks Of Material - Describe THREE (3) inherent limitations of internal control system that could limit its effectiveness

Create a payoff table for strategy to confirm : Suppose the US Congress passes a bill that prohibits short selling of stocks, making it impossible for investors to make a profit when stock prices fall. Howeve

Market cap size : Company A has 36.88 million shares outstanding trading at $2.78 each (the same shares were $3.11 last week).

What is the present value of the firm : An all-equity financed firm currently has EBIT of $10,000. EBIT is expected to stay at this level for 10 years. After that, the firm will cease operation. The f

User Account

All Pages

Lowasugar project and the boostametabol project

Reference no: EM133113235

Reference no: EM133113235

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

What is the 20th percentile for nox exhaust

What can investors and other users glean from an analysis

Key variances between budgeted and actual results

What is the dollar cost of debt

What is the total percentage return from investing

If the level of interest rates which is currently 9 goes

How much is the monthly repayment

What is the value of the car after the first year

Structure analysis for a health care organization or medical

Bilaterally cleared and centrally cleared swap

What is the stock worth today

Assume that you are the chief financial officer at porter

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT