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Business, 02.06.2021 18:10 mmcdaniels46867

Blue Spruce Company is considering two new projects, each requiring an equipment investment of $101,800. Each project will last for three years and produce the following cash flows: Year Cool Hot
1 $40,400 $44,400
2 45,400 44,400
3 50,400 44,400
136,200 $133,200

The equipment will have no salvage value at the end of its three-year life. Blue Spruce Company uses straight-line depreciation and requires a minimum rate of return of 12%.

Present value data are as follows:
Period 12%
1 0.89286
2 0.79719
3 0.71178

Present Value of an Annuity of 1
Period 12%
1 0.89286
2 1.69005
3 2.40183

Required:
Compute the net present value of each project.

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Blue Spruce Company is considering two new projects, each requiring an equipment investment of $101,...
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