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What is the total present value of future cash inflows

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Reference no: EM131787138

Nylan Manufacturing is considering two alternative investment proposals with the followingdetails:

Proposal X Proposal Y
Investment $720,000 $500,000
Useful life 5 years 4 years
Estimated annual net cash inflows $150,000 $90,000
Residual value $50,000 $0
Depreciation method Straight-line Straight-line
Discount rate 10% 9%

What is the total present value of future cash inflows from ProposalX?

Present value of annuity of$1:

8% 9% 10%
1 0.926 $0.92 0.909
2 1.783 1.759 1.736
3 2.577 2.531 2.487
4 3.312 3.24 3.17
5 3.993 3.89 3.791
6 4.623 4.486 4.355

Present value of $1:

8% 9% 10%
1 0.926 0.917 0.909
2 0.857 0.842 0.826
3 0.794 0.772 0.751
4 0.735 0.708 0.683
5 0.681 0.65 0.621
6 0.63 0.596

0.564

A. $568,650
B. $742,340
C. $599,700
D. $650,070

Reference no: EM131787138

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