Vasquez corporation is considering investing in two

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Reference no: EM13599650

Vasquez Corporation is considering investing in two different projects. It could invest in both, neither, or just one of the projects. The forecasts for the projects are as follows.

Project A Project B
Capital investment $195,950 $301,810
Net annual cash flows $50,535 $65,116
Length of project 5 years 7 years

The minimum rate of return acceptable to Vasquez is 10%.

Instructions Compute the net present value of the two projects. (Round answers to 0 decimal places, e.g. 125. If amount is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)

PROJECT A $
PROJECT B $

What capital budgeting decision should Vasquez make? Invest in

Project A could be modified. By spending $19,395 more initially, the net annual cash flows could be increased by $10,160 per year.

Calculate the new net present value. $ ______________What project(s) should Vasquez's invest in?

Reference no: EM13599650

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