In: Accounting
APPLY THE CONCEPTS: Internal rate of return
The Underwood purchasing department has made revisions to their costs and annual cash flows for Project A and Project B, as outlined below. | |
Project A |
Project B |
Project A's revised investment is $250,700. The project's life and cash flow have changed to 7 years and $51,500, respectively, while expenses have been eliminated. | Project B's revised investment is $119,800. The project's life and cash flow have changed to 6 years and $82,500 while expenses reduced slightly to $55,000. |
Compute the internal rate of return factor for Project A and Project B and then identify each project's corresponding percentage from the PV ordinary annuity table.
Note: Enter the IRR factor, to 5 decimal places.
Project A: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %
Project B: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %