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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $36,000 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,000 $4,500 $59,000 Beta Project 8,000 23,000 28,000 59,000 (Click here to see present value and future value tables) A. If the discount rate is 15%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $fill in the blank 1 Beta Project $fill in the blank 2 B. Which project should be recommended.

There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $36,000 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,000 $4,500 $59,000 Beta Project 8,000 23,000 28,000 59,000 (Click here to see present value and future value tables) A. If the discount rate is 15%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $fill in the blank 1 Beta Project $fill in the blank 2 B. Which project should be recommended.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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    There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $36,000 and is expected to generate the following cash flows:

      First Year Second Year Third Year Total
    Alpha Project $32,500   $22,000     $4,500   $59,000
    Beta Project 8,000   23,000     28,000   59,000

    (Click here to see present value and future value tables)

    A. If the discount rate is 15%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places.

    Alpha Project $fill in the blank 1
    Beta Project $fill in the blank 2

    B. Which project should be recommended.

     

     

    .

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