Cooper Company must evaluate two capital expenditure proposals. Cooper’s hurdle rate is 10%. Data for the two proposals follow. Proposal X Proposal Y Required investment $120,000 $120,000 Annual after-tax cash inflows 24,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 72,000 Life of project 12 years 12 years Using net present value analysis, which proposal is the more attractive? Do not use negative signs with your answers. Round PV answers to the nearest whole number. Use rounded answers for subsequent calculation of net present value.
Cooper Company must evaluate two capital expenditure proposals. Cooper’s hurdle rate is 10%. Data for the two proposals follow. Proposal X Proposal Y Required investment $120,000 $120,000 Annual after-tax cash inflows 24,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 72,000 Life of project 12 years 12 years Using net present value analysis, which proposal is the more attractive? Do not use negative signs with your answers. Round PV answers to the nearest whole number. Use rounded answers for subsequent calculation of net present value.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 3CMA
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Question
Cooper Company must evaluate two capital expenditure proposals. Cooper’s hurdle rate is 10%. Data for the two proposals follow.
Proposal X | Proposal Y | |
---|---|---|
Required investment | $120,000 | $120,000 |
Annual after-tax |
24,000 | |
After-tax cash inflows at the end of years 3, 6, 9, and 12 | 72,000 | |
Life of project | 12 years | 12 years |
Using
Do not use negative signs with your answers. Round PV answers to the nearest whole number. Use rounded answers for subsequent calculation of net present value.
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