GTO Inc. is considering an investment costing $214,170 that results in net cash flows of $30,000 annually

Question:

GTO Inc. is considering an investment costing $214,170 that results in net cash flows of $30,000 annually for 11 years.

(a) What is the internal rate of return of this investment?

(b) The hurdle rate is 9.5%. Should the company invest in this project on the basis of internal rate of return?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamental Accounting Principles

ISBN: 9781260247985

25th Edition

Authors: John J Wild, Ken Shaw

See More Books

Question Posted: Oct 28, 2021 01:42 AM

See More Questions

For the same block of steel (E=210 GN/m2 and v=0.3), determine the orientation of the element 0 which would result in the maximum principle stress being achieved. Enter your answer in degrees to 1...
What is the internal rate of return on the following projects, each of which requires a $20,000 cash outlay now and returns the cash flows indicated? a. $10,426.72 at the end of Years 1 and 2. b....
What is the internal rate of return for the stream of cash flows shown below? Period Cash Flow 0 ..............($ 10,000) 1 ...............1,000 2 ..................1,000 3 ...............1,000 4...
Valuing Preferred Stock Best Rate Bank just issued some new preferred stock. The issue will pay a $10 annual dividend in perpetuity, beginning 10 years from now. If the market requires a 7 percent...
A thermal storage is made with a rock (granite) bed of 2 m3 which is heated to 400 K using solar energy. A heat engine receives a QH from the bed and rejects heat to the ambient at 290 K. The rock...
Kelly B. Stites, Inc., is considering an investment in one of two portfolios. Given the information that follows, which investment is better, based on risk (as measured by the standard deviation) and...
In a landmark case, William E. Story told his nephew in March 1869 that if the nephew would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he...
The checking accounts of Sun Bank are categorized by the age of account and the account balance. Auditors will select accounts at random from the following 1000 accounts (numbers in the table are the...
1 Define Management? 2 Define Leadership? 234 4 Explain the Qualities of a successful leader? Define transformational leadership? 5 Explain about Decision making process? Explain the types of...
A bank provides each account holder with a nine-digit card number that is arranged in three blocks, as shown in the example opposite. Find, in index form, the number of card numbers available if: a....
Quail Co. is considering buying a food truck that will yield net cash inflows of $10,000 per year for seven years. The truck costs $50,000 and has an estimated $6,000 salvage value at the end of the...
Refer to the information in Exercise 26-1. Project 1 has a seven-year useful life, and Project 2 has a fiveyear useful life. Assume the company requires a 10% rate of return on its investments....
A unit step function $(f(t)=u(t))$ is applied on the mechanical system shown in Fig. 5.6 .1. The output is the horizontal position of the mass which is illustrated in Fig. 5.6 .2. Determine the...
How does the process of oxidative phosphorylation in mitochondria exemplify the intricacies of bioenergetics, and what molecular mechanisms underlie its regulation in response to cellular energy...
Consider a closed economy with the following partcipants: households, rental firm, production firm and the government: (a)Production firm: the aggregate production function of the production firm can...
What are the emerging roles of non-canonical homeostatic mechanisms, such as microRNA-mediated gene regulation and long non-coding RNAs, in fine-tuning cellular responses to stressors and maintaining...
Globalization has made the world a more connected and interdependent place, but it has also had negative economic impacts and perpetuated social inequality within and between countries. Globalization...
You need $135,000 to renovate your restaurant and the best simple interest rate you can find was 4.5%. Assume you have 2 years to save. How much money do you need to invest today?
Suppose that f. V W is an isomorphism. Prove that the set {1, . . . , k} V is linearly dependent if and only if the set of images {f(1), . . . , f(k)} W is linearly dependent.
For the following exercises, rewrite the sum as a product of two functions or the product as a sum of two functions. Give your answer in terms of sines and cosines. Then evaluate the final answer...
A companys Factory Overhead T-account shows total debits of $325,000 and total credits of $331,000 at the end of a period. Prepare the journal entry to close the balance in the Factory Overhead...
An advertising agency is estimating costs for advertising a music festival. The job will require 50 direct labor hours at a cost of $60 per hour. Overhead costs are applied at a rate of $95 per...
At the beginning of a period a company predicts total direct materials costs of $175,000 and total overhead costs of $218,750. If the company uses direct materials costs as its activity base to...
ANSWER ALL QUESTIONS 1. Illustrate and explain with examples the risk-return trade off graph of money market, foreign exchange market, bond market, equity market and derivatives market. State and...
Recommend an optimal improvement to the company's future financial goals.
Your bank account pays a nominal interest rate of 1 1 % , compounded semi - annually. Your plan is to deposit $ 2 , 4 0 0 in the account at the end of each of the next 1 0 years. How much will you...

GTO Inc. is considering an investment costing $214,170 that results in net cash flows of $30,000 annually

Question:

Step by Step Answer:

Present value of annuity factor Cash outflows annual cash inflows 214170 ...View the full answer

Fundamental Accounting Principles

Related Video

Students also viewed these Business questions