I\'m stuck on these problems and would appreciate help. Thanks! his Question: 2
ID: 2462878 • Letter: I
Question
I'm stuck on these problems and would appreciate help. Thanks!
his Question: 2 pts This Test: 20 pts Time Remaining 00:56:46 2 of 16 Use the NPV method to determine whether Smith Products should invest in the following projects Project A costs S270 000 and offers seen annual net cash meows of $56,000. Smith Products requires an annual return of 16% on projects like Pro ct B costs $390,000 and offers ten annual net cash i flows of S66 000 Smith Products demands an annual return of 14% on mest ments of nature 9) (Click the icon to new the present value annuity table ) (1) (Click the icon to wew the present value table) (Click the icon to wew the future value annuity table ) ( (Click the icon to view the future value table ) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project? Calculate the NPV of each project. (Round your answers to the nearest whole dolar Use parentheses or a minus sign for negathve net present values) The NPV of Project A is The NPV of Project B is Now calculate the maximum acceptable price to pay for each project (Round your answers to the nearest whole dollar ) Project A is Project B is Enter onner in each of the answsr boss Prewous GuesiornExplanation / Answer
Calculation of NPV of Project A Particulars Year Amount 16% Factor Present value C D C X D Cash Inflow Net Cash Inflow 1 -7 56,000 4.0386 226,162 A. Total Cash Inflow - PV 226,162 Cash Outflow Cost of project 0 270,000 1.0000 270,000 B. Total Cash Outflow - PV 270,000 NPV (A - B) (43,838) Calculation of NPV of Project B Particulars Year Amount 14% Factor Present value C D C X D Cash Inflow Net Cash Inflow 1 -10 66,000 5.2161 344,263 A. Total Cash Inflow - PV 344,263 Cash Outflow Cost of project 0 390,000 1.0000 390,000 B. Total Cash Outflow - PV 390,000 NPV (A - B) (45,737) Maximum Acceptable Price to Pay for Each Project A 226,162 Maximum Acceptable Price to Pay for Each Project B 344,263 As per Chegg Guidelines, You can ask one question at one time. For other questions please ask it again.