Rennin Dairy Corporation is considering a plant expansion decision that has an e

Question

Rennin Dairy Corporation is considering a plant expansion decision that has an estimated useful life of 20 years. This project has an internal rate of return of 15% and a payback period of 9.6 years. How would a decrease in the expected salvage value from this project in 20 years affect the following for this project?

............Internal Rate of Return.....Payback Period
A..........Decrease.....................Decrease
B..........No Effect.....................Decrease
C..........Decrease......................No effect
D..........Increase........................No Effect
E..........No Effect.......................No Effect

a. Choice A b. Choice B c. Choice C d. Choice D e. Choice E

Explanation / Answer

9 = A) Decrease Decrease

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