Maxim, Inc

question 64

Essay

Maxim, Inc., is considering two mutually exclusive projects. Project 1 requires an investment of £40,000, while Project 2 requires an investment of £30,000. Cash revenues and cash costs for each project are shown below. The company estimates that at the end of the fourth year Project 1 would have a salvage value of £3,000 and Project 2 would have a salvage value of £1,000.
Required:
a.
Determine the net present value of EACH project using a 16 per cent discount rate.
b.
Prepare a memorandum for management stating your recommendation. Include supporting calculations in good form.

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Definitions:

Dominant Allele

An allele that expresses its phenotypic effect even when heterozygous with a recessive allele.

Genotype

The genetic makeup of an organism, representing the combination of alleles inherited from its parents.

Phenotype

The assortment of detectable features in an individual, formed through the combination of their genetic material and the influence of environmental conditions.

Genotype Frequencies

The proportion of different genetic types within a population.