Competency Assessment Title: Net Present and Internal Rate of Return

Competency Assessment Title: Net Present and Internal Rate of Return

 

Assignment Directions

 

Review the scenario and complete the activity below. This scenario can also be found in the “Problems – Series A” section 10-19A of Ch. 10,

 

“Planning for Capital Investments” of Fundamental Managerial Accounting Concepts.

 

Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of limited resources, he will be able to

 

invest in only one of them.

 

Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage

 

value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for

 

Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B.

 

Both investments are expected to provide cash flow benefits for the next four years. Donovan Enterprises’ desired rate of return is 8 percent. Your

 

task, as Senior Accountant, is to use your knowledge of net present value and internal rate of return to identify the preferred method and best

 

investment opportunity for the company and present your results to Dwight Donovan.

 

Use Excel®—showing all work and formulas—to compute the following:

 

The net present value of each project. Round your computations to 2 decimal points.

The approximate internal rate of return for each project. Round your rates to 6 decimal points.

Create an 8- to 10-slide presentation showing the comparison of the net present value approach with the internal rate of return approach that you

 

calculated.

 

Complete the following in your presentation:

 

Analyze the results of the net present value calculations and the significance of these results, supported with examples.

Determine which project should be adopted based on the net present value approach and provide rationale for your decision.

Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.

Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.

Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.

Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan

Enterprises and provide rationale for your recommendation.

Include detailed speaker notes.

1 attachments

Competency Assessment Title: Net Present and Internal Rate of Return

We offer the best custom writing paper services. We have answered this question before and we can also do it for you.

GET STARTED TODAY AND GET A 20% DISCOUNT coupon code DISC20

We offer the bestcustom writing paper services. We have done this question before, we can also do it for you.

Why Choose Us

  • 100% non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How it Works

  • Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.