Cellan Manufacturing is considering the following two investment proposals: Proposal Y Proposal X $732,000 5 years nvestment Useful life Estimated annual net cash inflows received at he end of each year Residual value Depreciation method Annual discount rate 1 2 3 4 Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 5 6 0.926 1.783 2.577 3.312 3.993 4.623 A. $255,000 OB. $295,800 OC. $317,520 O D. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $164,000 $68,000 Straight-line 0.909 1.736 2.487 3.170 3.791 4.355 10% ... $510,000 4 years $98,000 $0 Straight-line 9%

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...
Question
Stellan Manufacturing is considering the following two investment proposals:
Proposal X
Proposal Y
$510,000
4 years
Investment
Useful life
Estimated annual net cash inflows received at
the end of each year
Residual value
Depreciation method
Annual discount rate
1
2455 N.
Compute the present value of the future cash inflows from Proposal Y.
Present value of an ordinary annuity of $1:
8%
9%
10%
2
3
6
0.926
1.783
2.577
3.312
3.993
4.623
OA. $255,000
OB. $295,800
OC. $317,520
OD. $272,085
0.917
1.759
2.531
3.240
3.809
4.486
$732,000
5 years
0.909
1.736
2.487
3.170
3.791
4.355
$164,000
$68,000
Straight-line Straight-line
10%
$98,000
$0
...
9%
Transcribed Image Text:Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y $510,000 4 years Investment Useful life Estimated annual net cash inflows received at the end of each year Residual value Depreciation method Annual discount rate 1 2455 N. Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 2 3 6 0.926 1.783 2.577 3.312 3.993 4.623 OA. $255,000 OB. $295,800 OC. $317,520 OD. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $732,000 5 years 0.909 1.736 2.487 3.170 3.791 4.355 $164,000 $68,000 Straight-line Straight-line 10% $98,000 $0 ... 9%
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