Roy Company Is Trying to Decide Whether to Invest in One

question 170

Essay

Roy Company is trying to decide whether to invest in one of two projects: X or Z.Associated data for each investment project follow:
$\begin{array}{|l|r|r|}\hline & {\text { Project }} \\\hline & \mathbf{X} & \mathbf{Z} \\\hline \text { Cost of equipment } & \$ 90,000 & \$ 140,000 \\\hline \text { Useful life } & 6 \text { years } & 9 \text { years } \\\hline \text { Annual net cash inflow } & \$ 25,000 & \$ 30,000 \\\hline \text { Salvage value } & \$ 8,000 & \$ 12,000 \\\hline\end{array}$
The equipment for each project is in Class 22 with a 30% maximum CCA rate.The income tax rate is 30%.Roy's after-tax cost of capital is 12%.
Required:
a)Calculate the net present value of each project,and indicate which appears preferable in terms of net present value.
b)Calculate the profitability index for each project,and indicate which project would be preferable using this investment criterion.

Identify key psychological concepts and historical perspectives in psychology.

Understand the principles of psychoanalysis and psychodynamic therapy.

Demonstrate knowledge of the application of psychology to real-world problems.

Recognize the significance of levels of analysis in understanding behavior and mental processes.

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Definitions:

Transposable Elements

Transposable elements are DNA sequences capable of changing their position within the genome, playing a significant role in gene and genome evolution.

PCR

Polymerase Chain Reaction, a technique used in molecular biology to amplify segments of DNA for analysis.

Copies

Replicas or duplicates of an original item, such as a document, artwork, or piece of digital data, made through various reproduction techniques.

DNA

Deoxyribonucleic acid, a self-replicating material present in nearly all living organisms as the carrier of genetic information.