Skysong is contemplating a capital project costing $34838. The project will provide annual cost savings of $12800 for 3 years and have a salvage value of $4000. The company's required rate of return is 10%. The company uses straight-line depreciation. Present Value PV of an Annuity Year of 1 at 10% of 1 at 10% 1 0.909 2 1.736 3 2.487 This project is 0.909 0.826 0.751 unacceptable because it has a negative NPV. acceptable because it has a zero NPV. acceptable because it has a positive NPV. unacceptable because it earns a rate less than 10%.

Skysong is contemplating a capital project costing $34838. The project will provide annual cost savings of $12800 for 3 years and have a salvage value of $4000. The company's required rate of return is 10%. The company uses straight-line depreciation. Present Value PV of an Annuity Year of 1 at 10% of 1 at 10% 1 0.909 2 1.736 3 2.487 This project is 0.909 0.826 0.751 unacceptable because it has a negative NPV. acceptable because it has a zero NPV. acceptable because it has a positive NPV. unacceptable because it earns a rate less than 10%.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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