Coyote Co. is considering two new projects, each requiring an equipment investment of $72,000. Each project will last for three years and produce the following annual net income. Year 1 2 3 TIP $ 6,000 9,000 14,000 $29,000 TOP $ 9,000 9,000 9,000 $27,000 The equipment will have no salvage value at the end of its three-year life. Coyote Co. uses straight-line depreciation. Coyote requires a minimum rate of return of 12%. Present value data are as follows: Present Value of 1 Period 12% 1 .893 2 .797 3 .712 Instructions (a) Compute the net present value of each project. (b) Which project should be selected? Why?

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?