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Unformatted text preview: expected to generate annual cash flows equal to $30,600 and income equal to $6,600 over each of the next five years. How much is the internal rate of return expected on the remodeling? Since IRR is a time value of money approach, use table 2 in Appendix C of the textbook. Divide the cost by the annual cash flows to get the factor: Initial investment annual cash flows = $110,306/$30,600 = 3.60477, which is the factor that must be located in the present value of an annuity table at n = 5. The factor equates to an interest rate close to 12%....
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This note was uploaded on 11/06/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.
- Fall '11