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Acct 505: Course Project B

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Would you recommend the acceptance of this proposal? Why or why not. Prepare a short double spaced Word paper elaborating and supporting your answer. I would recommend the acceptance of Clark Paints’ proposal to purchase the new machine to make the paint cans instead of purchasing them. My decision to accept the proposal is supported by the net present value method. The net present value of this project is $33,035. Our textbook, Managerial Accounting, provides an explanation of this concept: “Under the net present value method, the present value of a project's cash inflows is compared to the present value of the project's cash outflows. The difference between the present values of these cash flows is called the net present value” (Garrison, 2012, p.583). Furthermore, our textbook, states: “Whenever the net present value is zero or greater an investment project is acceptable. Whenever the net present value is negative (the present value of the cash outflows exceeds the present value of the cash inflows), an investment project is not acceptable” (Garrison, 2012, p. 583).
Below is a chart taken from our textbook, Managerial Accounting, found on page 583:
EXHIBIT 13–1 Net Present Value Analysis of a Proposed Project I included this chart because it clearly explains the rules of when to accept or reject a project. And it further supports my decision to accept the proposal of the new machine because the net present value is a positive value: $33,035. According to this analysis Clark Paints should purchase the new machine.
References

Garrison, R. (2012). Managerial Accounting (14th ed). McGraw-Hill Learning Solutions. Retrieved from…...

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