Time remaining: 1:12:5 1. Ignore income taxes in this problem) Rushforth Manufac

Question

Time remaining: 1:12:5 1. Ignore income taxes in this problem) Rushforth Manufacturing has $90,000 to invest in either Project A or Project B. The following data are available on these projects Project A Project B $90,000 40.000 $50.000 $29,000 $25,000 Cost of equipment needed now Working capital investment needed now... Annual cash operating inflows.... Salvage value of equipment in 6 years.... Both projects wll have a useful le of 6years. At the end of 6 years, the working capital investment will be reloased for use elsewhere. Rushforth's required rate of return is 14%. The net present value of Project A is closest to: O $71,000 O $27341 O $94.000 O $117,341

Explanation / Answer

Present value of inflows=$29000*Present value of annuity factor(14%,6)+$10000*Present value of discounting faactor(14%,6)

=$29000*3.889+$10000*0.456

=$117341

NPV=Present value of inflows-Present value of outflows

=$117341-$90,000

=$27341(Approx)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.