40. BP Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project LS1 Project RS1 Initial investment P2000,000 P300,000 Annual net income 10,000 21,000 Net annual cash inflow 50,000 71,000 Estimated useful life 5 years 6 years Salvage value -0- -0- The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Period 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The internal rate of return for Project RS1 is closest to?
40. BP Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project LS1 Project RS1 Initial investment P2000,000 P300,000 Annual net income 10,000 21,000 Net annual cash inflow 50,000 71,000 Estimated useful life 5 years 6 years Salvage value -0- -0- The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Period 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The internal rate of return for Project RS1 is closest to?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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40. BP Company is considering two capital investment proposals.
Estimates regarding each project are provided below:
|
Project LS1 |
Project RS1 |
Initial investment |
P2000,000 |
P300,000 |
Annual net income |
10,000 |
21,000 |
Net annual |
50,000 |
71,000 |
Estimated useful life |
5 years |
6 years |
Salvage value |
-0- |
-0- |
The company requires a 10%
Present Value of an Annuity of 1
Period |
9% |
10% |
11% |
12% |
5 |
3.890 |
3.791 |
3.696 |
3.605 |
6 |
4.486 |
4.355 |
4.231 |
4.111 |
The
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