Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Year Plant Expansion Retail Store Expansion 1 $105,000 $88,000 2 86,000...









  1. Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:





















































    Year

    Plant Expansion

    Retail Store Expansion
    1$105,000$88,000
    286,000103,000
    374,00071,000
    467,00049,000
    521,00042,000
    Total$353,000$353,000



    Each project requires an investment of $191,000. A rate of 10% has been selected for the net present value analysis.

































































































    Present Value of $1 at Compound Interest

    Year

    6%

    10%

    12%

    15%

    20%
    10.9430.9090.8930.8700.833
    20.8900.8260.7970.7560.694
    30.8400.7510.7120.6580.579
    40.7920.6830.6360.5720.482
    50.7470.6210.5670.4970.402
    60.7050.5640.5070.4320.335
    70.6650.5130.4520.3760.279
    80.6270.4670.4040.3270.233
    90.5920.4240.3610.2840.194
    100.5580.3860.3220.2470.162


    Required:



    1a.Compute the cash payback period for each project.


















    Cash Payback Period
    Plant Expansion
    Retail Store Expansion


    1b.Compute the net present value. Use the present value of $1 table above.If required, round to the nearest dollar.


























    Plant Expansion

    Retail Store Expansion
    Total present value of net cash flow$fill in the blank 3$fill in the blank 4
    Less amount to be investedfill in the blank 5fill in the blank 6
    Net present value$fill in the blank 7$fill in the blank 8


    2.Because of the timing of the receipt of the net cash flows, the   offers a higher  .















Jun 08, 2022
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