Ueker Company is considering three capital expenditure projects. Relevant data f

Question

Ueker Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Project Investment Annual Income Life of Project 22A $240,560 $17,280 6 years 23A 271,490 20,640 9 years 24A 283,070 18,400 7 years 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. (Refer the below table)

(a)

Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 10.)

Project Internal Rate of
Return 22A % 23A % 24A % TABLE 4 Present Value of an annuity of 1 (n) Payments 4% 5% Bo 99% 10% 11% 12% 15% 96154 95238 .94340 0.9345892593 9174390909 90090 .89286 .86957 1.88609 1.85941 1.83339 1.80802 178326 1.75911173554171252 1.69005 1.62571 2.77509 2.72325 2.67301262432257710253130 2.48685 2.44371 2.40183228323 3.62990 3.54595346511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079369590 3.60478 3.35216 5.24214 14507569 4.91732 4.76654462288448592 4.35526 4.23054 4.11141 3.78448 10 6.00205578637 5.58238538929 5.20637503295 4.86842 4.71220 4.56376 4.16042 6.73274646321 6.20979 5.97130 5.74664 5.53482 5.33493514612496764 4.48732 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825477158 8.11090 7.72173 7.36009 7.02358671008 6.41766 6.14457 5.88923565022 5.01877 11 12 13 8.76048 8.30641 7.88687 7.49867713896680519 6.49506620652 5.93770 5.23371 9.38507886325838384 7.94269 7.53608716073 6.81369649236 6.19437542062 9.98565 9.39357 8.85268 8.35765790378 7.48690 7.10336 6.74987 6.42355558315 14 10.56312 9.89864929498 8.74547824424 7.78615 7.36669698187 6.62817572448 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 11.65230 10.83777 10.10590 9.44665 8.85137831256 7.82371 7.37916697399 5.95424 17 12.16567 11.2740710.47726 9.76322912164854363 8.02155 7.54879 7.11963 6.04716 18 19 20 12.65930 11.68959 10.82760 10.05909 9.37189875563 8.20141770162724967 6.12797 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.83929 7.36578 6.19823 13.59033 12.46221 11.46992 10.59401981815 9.12855 8.51356 7.96333746944 6.25933

Explanation / Answer

Answer:(a)

Year Project 22 A Project 23A Project 24 A 0 -240560 -271490 -283070 1 57373.33 50806 58839 2 57373.33 50806 58839 3 57373.33 50806 58839 4 57373.33 50806 58839 5 57373.33 50806 58839 6 57373.33 50806 58839 7 50806 58839 8 50806 9 50806 IRR 11% 12% 10%

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