A company has evaluated several projects using net present value. All projects are similar in amount invested and risk. Rank the
projects in the order they should be accepted.
1 answer:
Answer:
First option - $2067
second option - $340
third option - $62
not acceptable - ($615)
Explanation:
Please find attached the question used in answering this question.
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
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Answer:
Total Green's Investment 329,607.8
Explanation:
Book Value 275,200
Goodwill 25,650
<u>First we calculate the goodwill, which will be amortize over 5 years</u>
Amortization of Goodwill 25,650/5 = 5,130
Goodwill at December 31th 20,520
Next we use proportional equity to adjust the Green's book value Our proportion is 34%
Book Value 275,200
+ 34% of net income 125,120 = 42,540.8
-34% of cash dividends 25,450 = (8,653)
Book Value at December 31th 309,087.8
Book Value at December 31th 309,087.8
Goodwill at December 31th 20,520
Total Green's Investment 329,607.8