Exhibit 13-B 1: Present value of $1 table Joetz Corporation has gathered the fol
ID: 2593942 • Letter: E
Question
Exhibit 13-B 1: Present value of $1 table Joetz Corporation has gathered the following data on a proposed investment project (ignore income taxes) $32,000 $6,800 Investment required in equipment Annual cash inflows Salvage value of equipment Life of the investment Required rate of return 15 years 10% The company uses straight-line depreciation on all equipment Assume cash flows occur uniformly throughout a year except for the initial investment Click here to view Exhibit 13B-1 and The internal rate of return of the investment is closest to Cick here to view Exhibit 138-1 andiExholB to determine the appropriate discount factorts) using the tables provided.Explanation / Answer
IRR = 19.84
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The best way to calculate IRR is Excel.
Year
Cash flow
0
-32000
1
6800
2
6800
3
6800
4
6800
5
6800
6
6800
7
6800
8
6800
9
6800
10
6800
11
6800
12
6800
13
6800
14
6800
15
6800
IRR
19.84%
Formula
=IRR(G3:G18)
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Hope that helps.
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Year
Cash flow
0
-32000
1
6800
2
6800
3
6800
4
6800
5
6800
6
6800
7
6800
8
6800
9
6800
10
6800
11
6800
12
6800
13
6800
14
6800
15
6800
IRR
19.84%
Formula
=IRR(G3:G18)
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