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UploadACCT405-7 - Name Course ACCT405 Date P12-1A Compute...

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FileName: dce47052c5fcbea43d966685d99dfbdee8668423.xlsx, Tab: Problem P12-1A, Page 1 of 1, 02/24/2015, 12:48:32 Name: Course: ACCT405 Date: 2/20/2015 P12-1A – Compute annual rate of return, cash payback, and net present value Project Kilo Project Lima Project Oscar Capital investment: $150,000 $160,000 $200,000 Salvage value: $0 $0 $0 Annual net income: Year: 1 14,000 18,000 27,000 2 14,000 17,000 23,000 3 14,000 16,000 21,000 4 14,000 12,000 13,000 5 14,000 9,000 12,000 Total: $70,000 $72,000 $96,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is: 15% (Assume that cash flows occur evenly throughout the year.) Instructions: Project Kilo Depreciation per year = $30,000.00 Cash payback period = 2.14 Project Lima Project Oscar Depreciation = Depreciation = $32,000.00 $40,000.00 Year Year 1 $18,000 ($32,000) $11,600.00 1 $27,000 $40,000 $19,000 2 17,000 (32,000) 10,600.00 2 23,000 40,000 15,000 3 16,000 (32,000) 9,600.00 3 21,000 40,000 13,000 4 12,000 (32,000) 5,600.00 4 13,000 40,000 5,000 5 9,000 (32,000) 2,600.00 5 12,000 40,000 4,000 2.22 2.08 Cash Back Period Cash Back Period Project Kilo Project Lima Project Oscar Discount Cash Cash Cash Year Factor Inflow PV Inflow PV Inflow PV 1 0.86957 14,000 12,174 18,000 15,652 27,000 23,478 2 1.62571 14,000 22,760 17,000 27,637 23,000 37,391 3 2.28323 14,000 31,965 16,000 36,532 21,000 47,948 4 2.85498 14,000 39,970 12,000 34,260 13,000 37,115 5 3.35216 14,000 46,930 9,000 30,169 12,000 40,226 Total $70,000 $153,799 $72,000 $144,250 $96,000 $186,158 Capital investment: $150,000 $160,000 $200,000
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