to invest and is considering two different projects, Xand Y. The following data

Question

to invest and is considering two different projects, Xand Y. The following data are avalilable on the projects ianore income taxes in this problem) The Sawyer Corporation has $75,000 Click here to view Exhibn 88.1 and Exhibr 88 2 to determine the appropriate discount factorets using tabies s 7500075000 s75,000 19000 14,000 Cost of equipment needed now Arnusl cesh operesing inflows Solvage velue in 5 yeers 9000 etsewhere Sawyers dlscount rate is 10% Both projects wil have a usefu lte of 5 years at the end of 5 years, the working captal will be released for use The net present velue of project Y is closest to $9,509 O $24649 O $8.009 ($8,009,

Explanation / Answer

$24,649 Statement showing Cash flows Particulars Time PVf 10% Amount PV Cash Outflows - Working Capital                           -                        1.00         (75,000.00)         (75,000.00) PV of Cash outflows = PVCO         (75,000.00) Cash inflows                      1.00                  0.9091            14,000.00            12,727.27 Cash inflows                      2.00                  0.8264            14,000.00            11,570.25 Cash inflows                      3.00                  0.7513            14,000.00            10,518.41 Cash inflows                      4.00                  0.6830            14,000.00              9,562.19 Cash inflows                      5.00                  0.6209            14,000.00              8,692.90 Cash inflows                      5.00                  0.6209            75,000.00            46,569.10 PV of Cash Inflows =PVCI            99,640.11 NPV= PVCI - PVCO            24,640.11

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