Net Present Value and Internal Return Rate

  Please do the Problem 10-19A  that’s attached the create a PowerPoint Presentation

Attached is Problems – Series A” section 10-19A of Ch. 10, “Planning for Capital Investments” of Fundamental Managerial Accounting Concepts. This scenario puts you at the task as a Senior Accountant for Donovan Enterprises to identify the preferred method and best investment opportunity for the company.

Create a PowerPoint presentation showing the comparison of the net present value approach with the internal rate of return approach calculated above. Complete the following in your presentation:

• Analyze the results of the net present value calculations and the significance of these results, supported with examples. (This means to explain in Writing what the results mean to you or the business management.)
• Determine which project should be adopted based on the net present value approach and provide rationale for your decision.  (This means to explain in Writing what the results mean to you or the business management.)
• Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.  (This means to explain in Writing what the results mean to you or the business management.)
• Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.  (This means to explain in Writing what the results mean to you or the business management, one sentence will not earn many points.)
• Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.  (This means to explain in Writing what the results mean to you or the business management, one sentence will not earn many points.)
• Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises.  (This means to explain in Writing what the results mean to you or the business management, one sentence will not earn many points.)

Just a heads up, you will need to address these questions in more than a bullet point in your Presentation. If you provide a presentation with bullet points only and no verbiage, you will not earn full points for the assignment. You can always provide a written paper along with your presentation if you like or, include your explanations within your PowerPoint presentation.

Cite References and sources

Problem 10-19A Using net present value and internal rate of return to evaluate investment opportunities

Dwight Donovan, the president of Donovan 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 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

Required

a. Compute the net present value of each project. Which project should be adopted based on the net present value

approach? Round your computations to two decimal points.

b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Round your rates to six decimal points

c. Compare the net present value approach with the internal rate of return approach. Which method is better in the given circumstances? Why?