Solution-Compute the net present value for each project

Compute the net present value for each project

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Reference no: EM131997169

Question - NPV with Unequal Cash Flows

Sanchez Corporation is considering three long-term capital investment proposals. Relevant data on each project are as follows.

	Project
	Brown	Red	Yellow
Capital investment:	190,000	220,000	250,000
Annual net income:
Year 1	25,000	20,000	26,000
Year 2	16,000	20,000	24,000
Year 3	13,000	20,000	23,000
Year 4	10,000	20,000	17,000
Year 5	8,000	20,000	20,000
Total	72,000	100,000	110,000

Salvage value is expected to be zero at the end of each project. Depreciation is computed by the straight-line method. The company's minimum rate of return is the company's cost of capital which is 12%.

Instructions: Compute the net present value for each project. (Round to the nearest dollar.)

Reference no: EM131997169

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Compute the net present value for each project

Reference no: EM131997169

Reference no: EM131997169

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