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Wiley S tele Contact Us Louw PLUS PLUS Weygandt, Managerial Accounting, Be MANAGERIAL ACCOUNTING (ACCT 2120) tudy Practice Assignment Gradebook ORION Downloadable eTextbook en Assignment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT SOURCES Brief Exercise 12-5 Mcknight Company is considering two different, mutually exclusive capital expenditure proposals. Project Awill cost $411,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increasenetannual cash flows by $ 71,000. Project will cost $273,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $40,000. A discount rate of 10% is appropriate for both projects. Click here to view p table (Video) Compute the net present value and profitability index of each project. If the net present walue is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present walue answers to decimal places, e.g. 125 and profitability index answers to 2 decimal places, ed. 15.25 For calculation purposes, use 5 decimal places as displayed in the factor table provided.) [Video] [Video (Video) Net present value - Project A Profitability index - Project A Net present value - Project Study Profitability Index - Project B Which project should be accepted based on Net Present Value? should be accepted. Wich project should be accepted based on profitability Index should be accepted Click if you would like to show Work for this questioni Oon Show Work Plexi 2000-2019.hn Wiley Sons Inc. All Rights Reserved. A Division of the Wilsons

Answer 1

Projet A $411000 Initial Cost 1yeas Ulul lile Annual Cash Plew! t $71/000 Present Value ot futuu Cash lows - Anmual Cash flows x Amuity of PVFiyejhlol) $711000 X 6.4950 6 461, 150 Net Prsent Voalue = $461,1S0- 4411,000 50,150 Pselent value of fuctuu Cah Plows Profitability Tndex Inital Thues maut 461,1S0 $4111000 1.12

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Project & 413,000 Tnitial Thuestmaut 17 uuful tife 11 gears A nnual Carh ows 48,800 Paeleut valu e futue Cash lows Annual Cast lous x Annufty of (Pv Fngao. -1 48,800 X 6. 4950 6 17 $ 316,9 60 Net Present Value $ 316,9 60 $ 313, ee0 43,960 Prof itabi iy nd e $316,960 4 73, 600 1.16 Propect A should be accepted on tu bauis o Net Pruent : . Valut. should be a ceped en due baiu of Profhabity Trde Projet 8