Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Project C
PV of €70,000 per year for 5 years at 16% = €70,000 (3.274)
€229,180 Net initial investment
(200,000) Net present value
€
Project B PV of €20,000 per year for 10 years at 16% = €20,000 (4.833)
€ 96,660 Net initial investment
(100,000) Net present value
€ (Project F
PV at 16%
€23,000
× 0.862
€ 19,826 20,000
× 0.743 14,860 10,000
× 0.641 6,410 10,000
× 0.552 5,520
Total
PV
46,616 Net initial investment
(50,000) Net present value
€ (3,384) Project A
PV of annuity of €20,000 for 15 years = €20,000
× 0.862
€ 111,500 Deduct deferral of 2 years
=
20,000
× 1.605
(32,100)
PV of annuity in arrears
79,400
PV of €10,000 due in 2 years
=
10,000
× 0.743 7,430 Total PV
86,830 Net initial investment
(100,000) Net present value
€ (13,170)
Project E PV of annuity of €50,000 for 10 years = €50,000
× 4.833
€ 241,650 Deduct deferral of 3 years
=
50,000
× 2.246
(112,300)
PV of annuity in arrears
129,350
PV of €30,000 due in 3 years
=
30,000
× 0.641 19,230
PV of €15,000 due in 2 years
=
15,000
× 0.743 11,145
PV of €5,000 due in 1 year
=
5,000
× 0.862 4,310 Total PV
164,035 Net initial investment
(200,000) Net present value
€ (35,965)
Bhimani, Horngren, Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
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