Chichester Company is considering investing in the following two mutually exclusive projects:
$$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r }
\text { Year } & \text { Project A } & \text { Project B} \
1 & \$ 5,000 & \$ 3,500 \
2 & 4,000 & 3 , 500 \
3 & 3,000 & 3, 500 \
4 & 2,000 & 3, 500 \
\text { Total } & \$ 14,000 & \$ 14,000
\end{array}
\end{array}$$ (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 10%.What is the maximum amount Chichester should be willing to pay for each project?Suppose each project costs $10,000. Which project(s) should be accepted?

Question

Chichester Company is considering investing in the following two mutually exclusive projects:
 $$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r } 
\text { Year } & \text { Project A } & \text { Project B} \
1 & \$ 5,000 & \$ 3,500 \
2 & 4,000 & 3 , 500 \
3 & 3,000 & 3, 500 \
4 & 2,000 &  3, 500 \
\text { Total } & \$ 14,000 & \$ 14,000
\end{array}
\end{array}$$ (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 10%.What is the maximum amount Chichester should be willing to pay for each project?Suppose each project costs $10,000. Which project(s) should be accepted?

Quizplus · Accepted Answer

The Answer of Chichester Company is considering investing in the following two mutually exclusive projects:
 $$\begin{array}{l}
\text { Annual cash Inflows }\
\begin{array} { c r r } 
\text { Year } & \text { Project A } & \text { Project B} \
1 & \$ 5,000 & \$ 3,500 \
2 & 4,000 & 3 , 500 \
3 & 3,000 & 3, 500 \
4 & 2,000 &  3, 500 \
\text { Total } & \$ 14,000 & \$ 14,000
\end{array}
\end{array}$$ (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 10%.What is the maximum amount Chichester should be willing to pay for each project?Suppose each project costs $10,000. Which project(s) should be accepted?

Chichester Company Is Considering Investing in the Following Two Mutually