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Wortham Corporation The Wortham Corporation has recently evaluated a proposal to invest in cost-reducing production technology

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Wortham Corporation

The Wortham Corporation has recently evaluated a proposal to invest in cost-reducing production technology. According to the evaluation, the project would require an initial investment of $17,166 and would provide equal annual cost savings for five years. Based on a 10 percent discount rate, the project generates a net present value of $1,788. The project is not expected to have any salvage value at the end of its five-year life.

1. Refer to Wortham Corporation. What are the expected annual cost savings of the project? Present value tables or a financial calculator are required.

 a.              $3,500

1. 1. 2. $4,000
      3. $4,500
      4. $5,000
2. Refer to Wortham Corporation.  What is the project's expected internal rate of return? Present value tables or a financial calculator are required.
   1. 1. 10 %
      2. 11 %
      3. 13 %
      4. 14 %