Question

Dwight Donovan, the president of Solomon Enterprises is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project is to purchase machine that will enable factory automation; the machines expected to have a useful life of three years and salynge value Project supports a training program that will improve the skills of employees operating the current equipment Initial cash expenditures for Project Aare $114 000 and for Project Bare $46.000. The annual expected cash inflows are $54 119 for Project A and $19,814 for Proiect B. Both investments are expected to provide cash flow benefits for the next three years Solomon Enterprises cost of capital is percent and PVA $1 (Use appropriate factors) from the tables provided.) Required a. Compute the nat present value of each project which project should be adopted based on the nel present value approach? b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Complete this question by entering your answers in the tabs below. Required Required B Compute the net present value of each project, which project should be adopted based on the net present value approach? Round your intermediate calculations and find answers to 2 decimal places) Net Present Value $ 25,470.00 $ 500 Project Which should be adope

Someone please help me figure out part A with clarrifying answers says mine are wrong. post the pictures of tables on theee need this to help review for final

Answer 1

Net present value = Present value of cash inflow - Initial investment

Project A = ($54,119*2.577097) - $114,000

Project A = $139,469.91 - 114,000 = $25,469.91

Project B = ($19,814*2.577097) - $46,000

Project B = $51,062.60 - 46,000 = $5,062.6

As per above results Project A should be adopted.