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# p12-1b - Name Date Instructor Course Managerial Accounting...

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FileName: b18a48c2dca1f6be022b374de3b19c6335922d0b.xls, Tab: Problem P12-1B, Page 1 of 2, 12/28/2011, 19:03:27 Name: Date: Instructor: Course: project are as follows: Project Brown Project Red Project Yellow Capital investment \$200,000 \$225,000 \$250,000 Annual net income Year 1 \$25,000 \$20,000 \$26,000 2 16,000 20,000 24,000 3 13,000 20,000 23,000 4 10,000 20,000 22,000 5 8,000 20,000 20,000 Total \$72,000 \$100,000 \$115,000 Salvage value is expected to be zero at the end of each project. Depreciation is computed by the straight-line method. The company's required rate of return is the company's cost of capital which is 12% (Assume that cash flows occur evenly throughout the year.) Instructions: Project Brown Year Cash Flow Cumulative Cash Flow 1 Formula ( Amount + Formula ) Formula 2 Formula ( Amount + Formula ) Formula 3 Formula ( Amount + Formula ) Formula 4 Formula ( Amount + Formula ) Formula 5 Formula ( Amount + Formula ) Formula Cash payback period Amount - Amount = Formula Formula ÷ Amount = Formula Year Formula years Project Red Amount ÷ [( Amount + Amount )] = Formula years Project Yellow Year Cash Flow Cumulative Cash Flow 1 Formula ( Amount + Amount ) Formula 2 Formula ( Amount + Amount ) Formula 3 Formula ( Amount + Amount ) Formula 4 Formula ( Amount + Amount ) Formula 5 Formula ( Amount + Amount ) Formula Cash payback period Amount - Amount = Formula Formula ÷ Amount = Formula Year Formula years Project Red

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p12-1b - Name Date Instructor Course Managerial Accounting...

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