ital investment committee of Iguana Inc. is considering two capital investments. The estimated ig income and net cash flows from each investment are as follows: Year Robotic Assembler ng Income Robotic Assembler Net Cash Flow Warehouse Operating Income Warehouse Net Cash 35,000 $65,000 $21,000 $ 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 05,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line ation will be used, and no residual value is expected. The committee has selected a rate of 12% for s of the net present value analysis. Present Value of $1 at Compound Interest Year 12% 15% 20% 10.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.68: d: 1a. Compute the average rate of return for each investment. If required, round your answer to one place. Investment Committee Average Rate of Return Robotic Assembler % Warehouse % 1b. e the net present value for each investment. Use the present value of $1 table above. If required, >the nearest dollar. Line Item Description Robotic Assembler Warehouse Present value of net cash I in the blank 3 $fill in the blank 4 Amount to be invested fill in the blank 5 fill in the blank 6 Net value $fill in the blank 7 $fill in the blank 8
ital investment committee of Iguana Inc. is considering two capital investments. The estimated ig income and net cash flows from each investment are as follows: Year Robotic Assembler ng Income Robotic Assembler Net Cash Flow Warehouse Operating Income Warehouse Net Cash 35,000 $65,000 $21,000 $ 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 05,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line ation will be used, and no residual value is expected. The committee has selected a rate of 12% for s of the net present value analysis. Present Value of $1 at Compound Interest Year 12% 15% 20% 10.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.68: d: 1a. Compute the average rate of return for each investment. If required, round your answer to one place. Investment Committee Average Rate of Return Robotic Assembler % Warehouse % 1b. e the net present value for each investment. Use the present value of $1 table above. If required, >the nearest dollar. Line Item Description Robotic Assembler Warehouse Present value of net cash I in the blank 3 $fill in the blank 4 Amount to be invested fill in the blank 5 fill in the blank 6 Net value $fill in the blank 7 $fill in the blank 8
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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Transcribed Image Text:ital investment committee of Iguana Inc. is considering two capital investments. The estimated
ig income and net cash flows from each investment are as follows: Year Robotic Assembler
ng Income Robotic Assembler Net Cash Flow Warehouse Operating Income Warehouse Net Cash
35,000 $65,000 $21,000 $
25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000
05,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line
ation will be used, and no residual value is expected. The committee has selected a rate of 12% for
s of the net present value analysis. Present Value of $1 at Compound Interest Year
12% 15% 20% 10.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.68:
d: 1a. Compute the average rate of return for each investment. If required, round your answer to one
place. Investment Committee Average Rate of Return Robotic Assembler % Warehouse % 1b.
e the net present value for each investment. Use the present value of $1 table above. If required,
>the nearest dollar. Line Item Description Robotic Assembler Warehouse Present value of net cash
I in the blank 3 $fill in the blank 4 Amount to be invested fill in the blank 5 fill in the blank 6 Net
value $fill in the blank 7 $fill in the blank 8
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