Business, 13.12.2021 19:20 noglapotato

Rocco Manufacturing is considering following two investmentâ€‹proposals: Proposal X

Proposal Y

Investment

â€‹$740,000

â€‹$508,000

Useful life

5 years

4 years

Estimated annual net cash inflows received at the end of each year

â€‹$154,000

â€‹$92,000

Residual value

â€‹$66,000

â€‹$0

Depreciation method

â€‹Straight-line

â€‹Straight-line

Annual discount rate

â€‹10%

â€‹9%

Compute the present value of the future cash inflows from Proposal X.

Present value of an ordinary annuity ofâ€‹ $1:

â€‹8%

â€‹9%

â€‹10%

1

0.926

0.917

0.909

2

1.783

1.759

1.736

3

2.577

2.531

2.487

4

3.312

3.240

3.170

5

3.993

3.890

3.791

6

4.623

4.486

4.355

Present value ofâ€‹ $1:

â€‹8%

â€‹9%

â€‹10%

1

0.926

0.917

0.909

2

0.857

0.842

0.826

3

0.794

0.772

0.751

4

0.735

0.708

0.683

5

0.681

0.650

0.621

6

0.630

0.596

0.564

A.

â€‹$762,136

B.

â€‹$668,128

C.

â€‹$624,800

D.

â€‹$583,814

Answers: 2

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Rocco Manufacturing is considering following two investmentâ€‹proposals: Proposal X

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