Exercise 24-7 Ueker Company is considering three capital expenditure projects. R

Question

Exercise 24-7 Ueker Company is considering three capital expenditure projects. Relevant data for the projects are as follows. ject Investment 22A 23A 24A Annual Life of Income Project $241,530 $17,690 6 years 271,800 20,620 9 years 18,020 7 years 283,020 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. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Determine the internal rate of return for each project. (Round answers O decimal places, e.g. 10.) Project 22A 23A 24A natu Internal Rate of Return

Explanation / Answer

Project 22A: Annual cash flows=17690+(241530/6)= 57945 PV factor for internal rate of return=241530/57945= 4.16826 Internal rate of return = 12% Project 23A: Annual cash flows=20620+(271800/9)= 50820 PV factor for internal rate of return=271800/50820= 5.34829 Internal rate of return = 12% Project 24A: Annual cash flows=18020+(283020/7)= 58451 PV factor for internal rate of return=283020/58451= 4.84200 Internal rate of return = 10% Project 22A and 23A are acceptable

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.