Read the scenario in the below and complete the activity below. “Dwight Donovan, the president of...

Question

Read the scenario in the below and complete the activity below. “Dwight Donovan, the president of Donovan Enterprises, is considering two investment opportunities. Because of limited resources, he...

1 answer below »

Read the scenario in the below and complete the activity below.

“Dwight Donovan, the president of Donovan Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Donovan Enterprises’ desired rate of return is 8 percent. “

Use Excel®—showing all work and formulas—to compute the following:

Compute the net present value of each project.Round your computations to 2 decimal points.
Compute the approximate internal rate of return for each project. Round your rates to 6 decimal points

Create a PowerPoint® presentation showing the comparison of the net present value approach with the internal rate of return approach calculated above. Complete the following in your presentation:

Analyze the results of the net present value calculations and the significance of these results, supported with examples.
Determine which project should be adopted based on the net present value approach and provide rationale for your decision.
Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.
Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.
Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.
Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises.

Cite references to support your assignment.

Format your citations according to APA guidelines.

Answered 2 days After Jan 23, 2021

Nitish Lath · Accepted Answer

Taxation system in India – An overview
INVESTMENT APPRAISAL ANALYSIS. 
AN INTRODUCTION.
The investment appraisal technique is used to evaluate the investment opportunity for the entity. It analyzes the different investment alternatives  available for the entity. It helps in making the decision regarding the selection of the investment proposal. The methods used in the investment appraisal technique are NPV method, IRR and various other methods.
ANALYSIS OF THE RESULT OF NPV
The NPV method is the important method and takes into account the present value of cash movement i.e. movement I and out of the entity.(Thompson, Jayne 2021).
The NPV of Project A is $17,327.98 whereas that of the Project B is 14,880.30. This state that the NPV project A is more than that of project B.
The project A is having higher cash inflows from the project as compared to the cash inflows from the Project B.
		PROJECT A	PROJECT B
	Net Present Value	17,327.98	14,880.

Read the scenario in the below and complete the activity below. “Dwight Donovan, the president of Donovan Enterprises, is considering two investment opportunities. Because of limited resources, he...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment