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Ch 20 HW - Solutions

# Ch 20 HW - Solutions - 2019(a(b(c...

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20-19 (a) Present value = \$500 x 0.5674 = \$283.70 (b) Present value = \$100 x 3.6048 = \$360.48 (c) Present value = (\$300 x 0.7118) + (\$400 x 0.5674)               = \$213.54 + \$226.96               = \$440.50 (d) Present value = \$60 x 5.6502 = \$339.01 20-25 (1) Present value of (net) cash receipts:   Annual net savings   \$4,500 a x 4.1925   = \$18,866.25   Residual value         \$200 x 0.1615   =      32.30     Total     \$18,898.55 Investment    (  20,000.00 )   Net present value    (\$   1,101.45 ) a \$8,000 - \$3,200 - \$300 No, this capital expenditure is not acceptable. (Its net present value is negative.) (2) If the purchase price of the packaging machine were less than \$18,898.55 , this capital  expenditure would be acceptable. 20-1

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20-27 (1) Proposal A : Present value of cash receipts: \$3,600 x 3.2743 = \$11,787.48 Investment   (10,000.00 )   Net present value   \$ 1,787.48 Proposal B : Present value of cash receipts: \$20,000 x 0.4761 = \$ 9,522.00 Investment    (10,000.00 )   Net present value    \$  (478.00 ) Proposal C : Present value of cash receipts:   \$ 2,000 x 2.7982  = \$5,596.40

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Ch 20 HW - Solutions - 2019(a(b(c...

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