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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 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?

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