Assign 11 2 - better than others. I like the project...

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Assign 11-2 Exercise 12-7 years amount of cash flow 12% factor present value of cash flows annual cost savings 1-4 2880 3.037 8746.56 initial investment now -18000 -18000 salvage value 4 22500 22500 Net present value 13246.56 Exercise 12-8 1 2 3 4 investment req -48000 -360000 -270000 -450000 present value of cash inclows at a 10% discount rate 567270 433400 336140 522970 net present value 87270 73400 66140 522970 life of the project 6 12 6 3 project profitability index 1.82 0.20 0.24 1.16 According to both the net present value and the project profitability index, project 1 looks
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Unformatted text preview: better than others. I like the project profitability value because although the net present value on a project looks good, the projects are not equally desirable if the funds available for investments are limited. We should look at the profitability and see if its worth pursuing. Exercise 12-11 1 2 cost of equipment req 300000 working capital investment req 300000 annual cash inflows 80000 60000 salvage value of equip in 7 yrs 20000 life of the project 7.00 7.00...
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