$40.00 $15.00
They provide management with information about the company’s past performance. |
executive opinions |
Correlation coefficient |
as preventive maintenance |
top-down budgeting |
Internal rate of return |
Q)11
Project A | Project B | |
Initial Investment | $800,000 | $650,000 |
Annual Net Income | $50,000 | 45,000 |
Annual Cash Inflow | $220,000 | $200,000 |
Salvage Value | $0 | $0 |
Estimated Useful Life | 5 years | 4 years |
The company requires a 10% rate of return on all new investments.
Part (a): Calculate the payback period for each project.
Part (b): Calculate the net present value for each project.
Part (c): Which project should Jackson Company accept and why? (Points : 30)