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Question(s) / Instruction(s):

Simms Manufacturing is considering two alternative investment proposals with the following data

                                                                                                   Proposal X        Proposal Y

Investment                                                                               $620,000       $400,000

Useful life                                                                                      8 years       8 years

Estimated annual net cash inflows for 8 years                    $130,000               $80,000

Residual value                                                                             $60,000       $0

Depreciation method                                                         Straight-line   Straight-line

Required rate of return                                                                  14%       10%

Note: Present value and future value tables are needed.

What is the net present value of Proposal Y? 

A.            $0

B.            $26,800 positive

C.            $136,800 positive

D.            $133,250 negative

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