Redmond Company is considering investing in one of the following two projects:
$$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r }
\text { Year } & \text { Project A} & \text { Project B} \
1 & \$ 2,000 & \$ 4,000 \
2 & 3,000 & 2,000 \
3 & 3,000 & 2,000 \
4 & 1,000 & 1,000 \
\hline \text { Total } & 9,000 & 9,000
\end{array}
\end{array}$$ (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required:Which project is more desirable strictly in terms of cash inflows? Why?Compute the present value of each project's cash inflows assuming the company's required rate of return is 12%.What is the maximum amount Redmond should be willing to pay for each project?Suppose each project costs $7,000. Which project(s) should be accepted? Note that only one project can be accepted.

Question

Redmond Company is considering investing in one of the following two projects:
 $$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r } 
\text { Year } & \text { Project A} & \text { Project B} \
1 & \$ 2,000 & \$ 4,000 \
2 & 3,000 & 2,000 \
3 & 3,000 & 2,000 \
4 & 1,000 & 1,000 \
\hline \text { Total } & 9,000 & 9,000
\end{array}
\end{array}$$ (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required:Which project is more desirable strictly in terms of cash inflows? Why?Compute the present value of each project's cash inflows assuming the company's required rate of return is 12%.What is the maximum amount Redmond should be willing to pay for each project?Suppose each project costs $7,000. Which project(s) should be accepted? Note that only one project can be accepted.

Quizplus · Accepted Answer

The Answer of Redmond Company is considering investing in one of the following two projects:
 $$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r } 
\text { Year } & \text { Project A} & \text { Project B} \
1 & \$ 2,000 & \$ 4,000 \
2 & 3,000 & 2,000 \
3 & 3,000 & 2,000 \
4 & 1,000 & 1,000 \
\hline \text { Total } & 9,000 & 9,000
\end{array}
\end{array}$$ (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required:Which project is more desirable strictly in terms of cash inflows? Why?Compute the present value of each project's cash inflows assuming the company's required rate of return is 12%.What is the maximum amount Redmond should be willing to pay for each project?Suppose each project costs $7,000. Which project(s) should be accepted? Note that only one project can be accepted.

Redmond Company Is Considering Investing in One of the Following