Compute net present value for each project. which project, Ask an Expert

Management Studies

Q. Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below:

Project Nuts Project Bolts
Initial Investment $175,000 $100,000
Annual Net Income $30,000 52,000
Annual Cash Inflow $70,000 $45,000
Salvage Value $0 $0
Estimated Useful Life 3 years 3 years

Company requires a 9% rate of return on all new investments.

Part (a) Compute payback period for each project.

Part (b) Compute net present value for each project.

Part (c) Which project should Jackson Company accept also explain why ?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9345631

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