Nylan Manufacturing is considering two alternative investment proposals with the followingdetails:
| Proposal X |
Proposal Y |
| Investment |
$720,000 |
$500,000 |
| Useful life |
5 years |
4 years |
| Estimated annual net cash inflows |
$150,000 |
$90,000 |
| Residual value |
$50,000 |
$0 |
| Depreciation method |
Straight-line |
Straight-line |
| Discount rate |
10% |
9% |
What is the total present value of future cash inflows from ProposalX?
Present value of annuity of$1:
| 8% |
9% |
10% |
| 1 |
0.926 |
$0.92 |
0.909 |
| 2 |
1.783 |
1.759 |
1.736 |
| 3 |
2.577 |
2.531 |
2.487 |
| 4 |
3.312 |
3.24 |
3.17 |
| 5 |
3.993 |
3.89 |
3.791 |
| 6 |
4.623 |
4.486 |
4.355 |
Present value of $1:
| 8% |
9% |
10% |
| 1 |
0.926 |
0.917 |
0.909 |
| 2 |
0.857 |
0.842 |
0.826 |
| 3 |
0.794 |
0.772 |
0.751 |
| 4 |
0.735 |
0.708 |
0.683 |
| 5 |
0.681 |
0.65 |
0.621 |
| 6 |
0.63 |
0.596 |
0.564
|
A. $568,650
B. $742,340
C. $599,700
D. $650,070