please show work Norton Manulacturing is considering two altemative investment p

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please show work

Norton Manulacturing is considering two altemative investment peopesals with the felowing detals Proposal Y Proposal X 5 years $68,000 10% Imestment Usetul ife Estimated annual net cash inflows 724,000 $516.000 d years $164,000 $106.000 50 Strnight- line Straght-ine 9% Degreciation method Discount rate What is the total present value of future cash inflaws tom Pisposal Y? Preaent value of annuity of $1 8% 9% 10% 0.926 0.917 0.909 1783 1.759 1.736 2577 2.531 2487 3.312 3.24 3.17 3.993 3 89 3.791 O4 5258 000 Ol $299 280 OC $275286 OD $343 440

Explanation / Answer

Answer:

Total Present Value from future cash inflows from proposal Y is calculated below;

Estimated Net Annual Cash Inflows = $ 106,000

Total Present Value of cash inflows from proposal Y = $ 106,000 x Present Value Annuity factor for 4 years @ 9% = $ 106,000 x 3.24 = $ 343,440 that is Option D. is correct answer.

Note: Since there is no income tax hence we have ingnored depreciation.

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