The internal rate of return method is used by Royston Construction Co. in analyzing a capital...
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The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $39,655 and annual net cash flows of $11,000 for each of the 7 years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 10% 12% 15% 20% 1 2 3 4 5 6 0.909 0.893 0.833 1.736 1.690 1.626 1.528 2.487 2.402 2.283 2.106 3.170 3.037 2.855 2.589 3.605 3.353 2.991 4.111 3.785 3.326 4.564 4.160 3.605 4.968 4.487 3.837 5.759 5.328 4.772 6.145 5.650 5.019 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. 7 8 6% 9 10 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 0.870 3.791 4.355 4.868 5.335 4.031 4.192 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. % The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $39,655 and annual net cash flows of $11,000 for each of the 7 years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 10% 12% 15% 20% 1 2 3 4 5 6 0.909 0.893 0.833 1.736 1.690 1.626 1.528 2.487 2.402 2.283 2.106 3.170 3.037 2.855 2.589 3.605 3.353 2.991 4.111 3.785 3.326 4.564 4.160 3.605 4.968 4.487 3.837 5.759 5.328 4.772 6.145 5.650 5.019 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. 7 8 6% 9 10 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 0.870 3.791 4.355 4.868 5.335 4.031 4.192 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %
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Related Book For
Financial And Managerial Accounting
ISBN: 9780357714041
16th Edition
Authors: Carl S. Warren, Jefferson P. Jones, William Tayler
Posted Date:
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