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deroth deroth
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A year ago

Lambert Manufacturing has $100,000 to invest in either Project A or Project B. The following data are available on these projects (Ignore income taxes.):

Project AProject B
Cost of equipment needed now$ 100,000$ 60,000
Working capital investment needed now$ 0$ 40,000
Annual cash operating inflows$ 40,000$ 35,000
Salvage value of equipment in 6 years$ 10,000$ 0

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.

Both projects will have a useful life of 6 years and the total cost approach to net present value analysis. At the end of 6 years, the working capital investment will be released for use elsewhere. Lambert's required rate of return is 14%.

The net present value of Project A is:



▸ $51,000

▸ $60,120

▸ $55,560

▸ $94,450
Textbook 
Introduction to Managerial Accounting: Brewer Edition: 9e

Introduction to Managerial Accounting: Brewer Edition: 9e


Edition: 9th
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Ms T.Ms T.
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A year ago
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