Chaptr_13 - Exercise139(10minutes Item ProjectA...

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Exercise 13-9  (10 minutes) Item Year(s) Amount of  Cash  Flows 16%  Factor Present  Value of  Cash  Flows Project A: Investment required. . Now $(15,000) 1.000 $(15,000) Annual cash inflows. . 1-10 $4,000 4.833     19,332     Net present value. ..... $       4,332     Project B: Investment. ............... Now $(15,000) 1.000 $(15,000) Cash inflow. .............. 10 $60,000 0.227     13,620     Net present value. ..... $ (1,380 ) Project A should be selected. Project B does not provide the required 16%  return, as shown by its negative net present value.
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Exercise 13-11  (30 minutes) 1. Required investment Factor of the internal  =  rate of return Annual cash inflow $136,700  = 5.468 $25,000 Looking in Exhibit 14B-2 and scanning along the 14-period line, a factor  of 5.468 represents an internal rate of return of 16%. 2.
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This note was uploaded on 11/11/2011 for the course ACC 202 taught by Professor Sue during the Summer '10 term at Michigan State University.

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Chaptr_13 - Exercise139(10minutes Item ProjectA...

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