Crane Incorporated management is considering investing in two alternative Production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for Production systems. Year System 1 System 2 0 -$14,400 -$46,800 1 15,200 30,800 2 15,200 30,800 3 15,200 30,800 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25%.) IRR of system 1 is Which has the higher IRR? has higher IRR. % and IRR of system 2 is %. Q Ac Q Acc Qu Acc Qu Acco

Crane Incorporated management is considering investing in two alternative Production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 7 percent discount rate for Production systems. Year System 1 System 2 0 -$14,400 -$46,800 1 15,200 30,800 2 15,200 30,800 3 15,200 30,800 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25%.) IRR of system 1 is Which has the higher IRR? has higher IRR. % and IRR of system 2 is %. Q Ac Q Acc Qu Acc Qu Acco

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 21BEA

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