This preview shows page 1. Sign up to view the full content.
Unformatted text preview: e Table on page 204.
$21,000
$19,995 Project A
87.5% Project B
90.4% Less Original Cost
Net Present Value
Project B:
Years 1 to 3
Less Original Cost
Net Present Value
Project C:
Years 1 to 3
Year 3 Residual Value
Less Original Cost
Net Present Value
Summary
Annual Rate of Return
Cash Payback Period
Net Present Value Estimated Annual Cash Inflow = Net Profit +Depreciation 1.27 years
$18,646 1.27 Years
$16,673 Present
Value
$37,673
$1,973 Proj. A also has a residual value, so a onetime cash flow
$39,646 in year 3. One time cash flows use Table on page 204.
$21,000
$18,646 Project C
100.0%
1.19 years
$19,995 Project C is the most attractive as AROR is highest;
NPV is highest; Payback period is shortest How Present Value Tables Work
Table Page 204
Assume $10,000 is invested @ 10% for 4 years. All $$ are left in the investmen...
View Full
Document
 Spring '14

Click to edit the document details