PROBLEM 12 - value $43,000 15 3.35216 $144,143 (150,000) $...

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PROBLEM 12-1A (a) Project Moe $150,000 ÷ [($13,000 + $30,000)] = 3.49 years Project Larry Cash Flow Cumulative Cash Flow $50,000 ($18,000 + $32,000) $49,000 ($17,000 + $32,000) $48,000 ($16,000 + $32,000) $44,000 ($12,000 + $32,000) $41,000 ($9,000 + $32,000) $50,000 $99,000 $147,000 $191,000 $232,000 Cash payback period 3.30 years $160,000 – $147,000 = $13,000 $13,000 ÷ $44,000 = .30 Project Curly Year Cash Flow Cumulative Cash Flow 1 2 3 4 5 $67,000 ($27,000 + $40,000) $62,000 ($22,000 + $40,000) $61,000 ($21,000 + $40,000) $53,000 ($13,000 + $40,000) $52,000 ($12,000 + $40,000) $67,000 $129,000 $190,000 $243,000 $295,000 Cash payback period 3.19 years $200,000 – $190,000 = $10,000 $10,000 ÷ $53,000 = .19
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PROBLEM 12-1A (Continued) (b) Project Moe Item Amount Years PV Factor Present Value Net annual cash flows Capital investment Negative net present
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Unformatted text preview: value $43,000 15 3.35216 $144,143 (150,000) $ (5,857) Project Larry Project Curly Year Discount Factor Cash Flow PV Cash Flow PV 1 2 3 4 5 Total .86957 .75614 .65752 .57175 .49718 $ 50,000 49,000 48,000 44,000 41,000 $232,000 $ 43,479 37,051 31,561 25,157 20,384 157,632 (160,000) $ (2,368) $ 67,000 62,000 61,000 53,000 52,000 $295,000 $ 58,261 46,881 40,109 30,303 25,853 201,407 (200,000) $ 1,407 Capital investment Positive (negative) net present value (c) Project Moe = $13,000 [($150,000 + $0) 2] = 17.33%. Project Larry = $14,400 [($160,000 + $0) 2] = 18%. Project Curly = $19,000 [($200,000 + $0) 2] = 19%. (d) Project Cash Payback Net Present Value Annual Rate of Return Moe Larry Curly 3 2 1 3 2 1 3 2 1 The best project is Curly....
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PROBLEM 12 - value $43,000 15 3.35216 $144,143 (150,000) $...

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