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Determine the internal rate of return for each project

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Question - Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows.

Project

Investment

Annual Income

Life of Project

22A

$242,300

$17,450

6 years

23A

274,200

20,920

9 years

24A

281,700

15,700

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. Iggy Company uses the straight-line method of depreciation.

(a) Determine the internal rate of return for each project.

(b) If Iggy Company's required rate of return is 11%, which projects are acceptable?


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Reference no: EM131609490

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