Question 4 Chow Company has gathered the following information on an investment

Question

Question 4

Chow Company has gathered the following information on an investment project:

Initial investment .................. $184,260

Annual cash inflows ................. $ 40,000

Cost of capital .....................     12%

Life of project .....................   9 years

Calculate the internal rate of return (IRR) for this investment
project. Enter your answer as a number followed by the percentage
symbol with no spaces in between (i.e., 29%).

***This question requires the use of the present value table factors listed below***

***Please DO NOT use any other means to solve the question than the table factors I’ve included***

resent Value of a Lump-Sum Rate of interest per period in percent 10 0.7441 0.6139 0.4630 0.4224 0.3855 0.3220 0.2697 0.2472 0.2267 0.1615 12 0.7014 0.5568 0.3971 0.3555 0.3186 0.2567 0.2076 0.1869 0.1685 0.1122 15 0.6419 0.4810 0.3152 0.2745 0.2394 0.1827 0.1401 0.1229 0.1079 0.0649 16 0.6232 0.4581 0.2919 0.2519 0.2176 0.1631 0.1229 0.1069 0.0930 0.0541 17 0.6050 0.4363 0.2703 0.2311 0.1978 0.1456 0.1078 0.0929 0.0802 0.0471 18 0.5874 0.4155 0.2503 0.2120 0.1799 0.1300 0.0946 0.0808 0.0691 0.0376 19 0.5703 0.3957 0.2317 0.1945 0.1635 0.1161 0.0829 0.0703 0.0596 0.0313 200.5537 0.3769 0.2146 0.1784 0.1486 0.1037 0.0728 0.0611 0.0514 0.0261 210.5375 0.35890.1987 0.1637 0.1351 0.0926 0.0638 0.0531 0.0443 0.0217 24 0.4920 0.3101 0.1577 0.1264 0.1015 0.0659 0.0431 0.0349 0.0284 0.0126 25 0.4776 0.2953 0.1460 0.1160 0.0923 0.0588 0.0378 0.0304 0.0245 0.0105 resent Value of an Annuit Rate of interest per period in percent Periods! 3% 10 8.5302 7.7217 6.7100 6.4177 6.1446 5.6502 5.2161 5.0188 4.8332 4.1925 129.9540 8.8633 7.5361 7.1607 6.8137 6.1944 5.6603 5.4206 5.1971 4.4392 15 11.9379 10.3797 8.5595 8.0607 7.6061 6.8109 6.1422 5.8474 5.57554.6755 16 12.5611 10.8378 8.8514 8.3126 7.8237 6.9740 6.2651 5.9542 5.6685 4.7296 17 13.1661 11.2741 9.1216 8.5436 8.0215 7.1196 6.3729 6.0472 5.7487 4.7746 18 13.7535 11.6896 9.37198.75568.2014 7.2497 6.4674 6.1280 5.8178 4.8122 19 14.3238 12.0853 9.6036 8.9501 8.3649 7.3658 6.5504 6.1982 5.8775 4.8435 20 14.8775 12.4622 9.8182 9.1286 8.5135 7.4694 6.6231 6.2593 5.9288 4.8696 2115.4150 12.8212 10.0168 9.2922 8.6487 7.5620 6.6870 6.3125 5.9731 4.8913 2517.4132 14.0939 10.6748 9.8226 9.0770 7.8431 6.8729 6.4641 6.09 4.9476

Explanation / Answer

PV factor for internal rate of return = 184260/40000= 4.6065 From the present value of an annuity table it can be found that PV factor 4.6065 for 9 years is at 16% Internal rate of return = 16%

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.