Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $110,610 and annual net cash flows of $18,000 for each of the 10 years of its useful life. Present Value of an Annuity of $1 at Compound Interest 6% Year 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.626 1.528 1.833 1.736 1.690 2.402 2.283 2.673 2.487 2.106 3.170 3.465 3.037 2.855 2.589 2.991 4.212 3.791 3.605 3.352 4.111 4.917 4.355 3.784 3.326 5.582 4.868 4.564 4.160 3.605 4.487 3.837 6.210 5.335 4.968 6.802 5.759 5.328 4.772 4.031 5.650 10 7.360 6.145 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round ecimal places. your answer to three Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.870 0.909 0.893 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 3.326 4.917 4.355 4.111 3.784 5.582 4.868 4.564 4.160 3.605 6.210 4.968 3.837 5.335 4.487 5.759 6.802 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %
Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $110,610 and annual net cash flows of $18,000 for each of the 10 years of its useful life. Present Value of an Annuity of $1 at Compound Interest 6% Year 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.626 1.528 1.833 1.736 1.690 2.402 2.283 2.673 2.487 2.106 3.170 3.465 3.037 2.855 2.589 2.991 4.212 3.791 3.605 3.352 4.111 4.917 4.355 3.784 3.326 5.582 4.868 4.564 4.160 3.605 4.487 3.837 6.210 5.335 4.968 6.802 5.759 5.328 4.772 4.031 5.650 10 7.360 6.145 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round ecimal places. your answer to three Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.870 0.909 0.893 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 3.326 4.917 4.355 4.111 3.784 5.582 4.868 4.564 4.160 3.605 6.210 4.968 3.837 5.335 4.487 5.759 6.802 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Internal Rate of Return Method
The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an
investment of $110,610 and annual net cash flows of $18,000 for each of the 10 years of its useful life.
Present Value of an Annuity of $1 at Compound Interest
6%
Year
10%
12%
15%
20%
0.943
0.909
0.893
0.870
0.833
1.626
1.528
1.833
1.736
1.690
2.402
2.283
2.673
2.487
2.106
3.170
3.465
3.037
2.855
2.589
2.991
4.212
3.791
3.605
3.352
4.111
4.917
4.355
3.784
3.326
5.582
4.868
4.564
4.160
3.605
4.487
3.837
6.210
5.335
4.968
6.802
5.759
5.328
4.772
4.031
5.650
10
7.360
6.145
5.019
4.192
a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round
ecimal places.
your answer to three
Transcribed Image Text:Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
0.943
0.870
0.909
0.893
0.833
1.833
1.736
1.690
1.626
1.528
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589
4.212
3.791
3.605
3.352
2.991
3.326
4.917
4.355
4.111
3.784
5.582
4.868
4.564
4.160
3.605
6.210
4.968
3.837
5.335
4.487
5.759
6.802
5.328
4.772
4.031
10
7.360
6.145
5.650
5.019
4.192
a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round
your answer to three decimal places.
b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for
the proposal.
%
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