Help P/S Exercise 24-7 Exercise 24-7 Ueker Company is considering three capital
ID: 2473808 • Letter: H
Question
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Exercise 24-7
Exercise 24-7
Ueker Company is considering three capital expenditure projects. Relevant data for the projects are as follows.Project Investment Annual
Income Life of
Project 22A $240,380 $17,300 6 years 23A 270,300 20,810 9 years 24A 283,500 18,380 7 years
Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Ueker Company uses the straight-line method of depreciation.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Explanation / Answer
Depreciation ::
22 A= $240,380/6=$40,063
Annual Cash flow =$40,063+17,300=$57,363
22A
Year
CashFlow
0
(240,380)
1
57,363
2
57,363
3
57,363
4
57,363
5
57,363
6
57,363
IRR
11.33%
Depreciation ::
23 A= $270,300/9=$30,033
Annual Cash flow =$30,033+20,810=$50,843
23A
Year
CashFlow
0
(270,300)
1
50,843
2
50,843
3
50,843
4
50,843
5
50,843
6
50,843
7
50,843
8
50,843
9
50,843
IRR
12.06%
Depreciation ::
24 A= $283,500/7=$40,500
Annual Cash flow =$40,500+18,380=$58,880
24A
Year
CashFlow
0
(283,500)
1
58,880
2
58,880
3
58,880
4
58,880
5
58,880
6
58,880
7
58,880
IRR
10.34%
22A
Year
CashFlow
0
(240,380)
1
57,363
2
57,363
3
57,363
4
57,363
5
57,363
6
57,363
IRR
11.33%
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