Internal rate of return method The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $80,304 and annual net cash flows of $16,000 for each of the 10 years of its usefull fe. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.909 0.893 0.870 0.833 1.736 1.690 1.626 1.528 2.487 2.402 2.283 2.106 3.170 3.037 2.855 2.589 3.791 3.605 3.353 2.991 4.917 4.355 3.785 3.326 5.582 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 6.210 6.802 5.759 5.328 4.772 4.031 7.360 6.145 5.650 5.019 4.192 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. 2 3 4 5 6 7 8 9 10 0.943 1.833 2.673 3.465 4.212 4.111 Using the factor determined in part (a) and the present value of an annulty 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 Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $80,304 and annual net cash flows of $16,000 for each of the 10 years of its usefull fe. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.909 0.893 0.870 0.833 1.736 1.690 1.626 1.528 2.487 2.402 2.283 2.106 3.170 3.037 2.855 2.589 3.791 3.605 3.353 2.991 4.917 4.355 3.785 3.326 5.582 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 6.210 6.802 5.759 5.328 4.772 4.031 7.360 6.145 5.650 5.019 4.192 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. 2 3 4 5 6 7 8 9 10 0.943 1.833 2.673 3.465 4.212 4.111 Using the factor determined in part (a) and the present value of an annulty of $1 table above, determine the internal rate of return for the proposal. %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Internal rate of return method
The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $80,304 and annual net cash flows of $16,000 for each of the 10 years of its useful
life.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
1.833
1.736
1.690
1.626
1.528
2.673
2.487
2.402
2.283
2.106
3.465
3.170
3.037
2.855
2.589
4.212
3.791
3.605
3.353
2.991
4.917
4.355
4.111
3.785
3.326
5.582
4.868
4.564
4.160
3.605
6.210
5.335
4.968
4.487
3.837
6.802
5.759
5.328
4.772
4.031
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.
2
3
4
5
6
7
8
9
10
p. 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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