# ACC 543 Planning for Capital Investments

## ACC 543 Planning for Capital Investments

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ACC 543 Planning for Capital Investments

Dwight Donovan, the president of Munoz Enterprises, is considering two 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 three 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 \$118,000 and for Project B are \$46,000. The annual expected cash inflows are \$56,018 for Project A and \$19,814 for Project B. Both investments are expected to provide cash flow benefits for the next three years. Munoz Enterprisesâ€™ desired rate of return is 8 percent. (PV of \$1 and PVA of \$1) (Use appropriate factor(s) from the tables provided.)

Required

Compute the net present value of each project. Which project should be adopted based on the net present value approach?
Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?

ESSAY GUIDELINES -:

Write a 1000-1500-word essay addressing each of the following points. Be sure to completely answer all the questions for each bullet point. There should be two main sections, one for each bullet below. Separate each section in your paper with a clear heading that allows your professor to know which bullet you are addressing in that section of your paper.

Support your ideas with at least three (3) sources using citations in your essay. Make sure to cite using the APA writing style for the essay. The cover page and reference page in correct APA do not count towards the minimum word amount. Review the rubric criteria for this assignment.

Length: 1000-1500 words; answers must thoroughly address the prompts in a clear, concise manner.

Evaluation Criteria for Paper

(10%) Resources used as rationale for approaches and as sources of content

_____ 5. (20%) write paper in a scholarly manner
(4%) Format includes title page, body of paper, & reference page, with pages numbered

_____ 5. (20%) Write the Paper in a scholarly manner
(4%) Format includes title page, body of paper, & reference page, with pages numbered

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