Refer to the following information. Which of the two projects, A or B, is better in terms of internal rate of return? Kenner Company is considering two projects. Project A $85,000 $20,676 Initial investment Annual cash flows Life of the project Depreciation per year 2 3 4 5 6 7 8 9 10 6 years $14,167 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 Present value of an Annuity of $1 in Arrears Periods 8% 12% 1 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 Project B $24,000 $6,011 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 5 years $4,800 D 14% 0.877 1.647 2.322 2.914 4.433 3.889 4.288 4.639 4.946 5.216 cal
Refer to the following information. Which of the two projects, A or B, is better in terms of internal rate of return? Kenner Company is considering two projects. Project A $85,000 $20,676 Initial investment Annual cash flows Life of the project Depreciation per year 2 3 4 5 6 7 8 9 10 6 years $14,167 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 Present value of an Annuity of $1 in Arrears Periods 8% 12% 1 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 Project B $24,000 $6,011 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 5 years $4,800 D 14% 0.877 1.647 2.322 2.914 4.433 3.889 4.288 4.639 4.946 5.216 cal
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4CMA: Foster Manufacturing is analyzing a capital investment project that is forecast to produce the...
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Question
100%
![9
10
6.247
6.710
5.759
6.145
O Project B with an IRR of 10%
O Project A with an IRR of 10%
O Project A with an IRR of 12%
O Project B with an IRR of 14%
Both projects have the same IRR
5.328
5.650](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ddaa374-92de-45cb-bfa1-5b2e672413e7%2Ff83cdac2-ed0a-47b4-9285-f13075c4a309%2Fh7xfrje_processed.jpeg&w=3840&q=75)
Transcribed Image Text:9
10
6.247
6.710
5.759
6.145
O Project B with an IRR of 10%
O Project A with an IRR of 10%
O Project A with an IRR of 12%
O Project B with an IRR of 14%
Both projects have the same IRR
5.328
5.650
![Refer to the following information. Which of the two projects, A or B, is better in
terms of internal rate of return?
Kenner Company is considering two projects.
Project A
$85,000
$20,676
Initial investment
Annual cash flows
Life of the project
Depreciation per year
2
3
4
5
6
7
8
9
10
6 years
$14,167
0.926
1.783
2.577
3.312
3.993
4.623
5.206
5.747
6.247
6.710
Present value of an Annuity of $1 in Arrears
Periods 8%
12%
1
0.893
1.690
2.402
3.037
3.605
4.111
4.564
4.968
5.328
5.650
Project B
$24,000
$6,011
10%
0.909
1.736
2.487
3.170
3.791
4.355
4.868
5.335
5.759
6.145
5 years
$4,800
14%
0.877
1.647
2.322
2.914
4.433
3.889
4.288
4.639
4.946
5.216](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ddaa374-92de-45cb-bfa1-5b2e672413e7%2Ff83cdac2-ed0a-47b4-9285-f13075c4a309%2F5jhea2s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Refer to the following information. Which of the two projects, A or B, is better in
terms of internal rate of return?
Kenner Company is considering two projects.
Project A
$85,000
$20,676
Initial investment
Annual cash flows
Life of the project
Depreciation per year
2
3
4
5
6
7
8
9
10
6 years
$14,167
0.926
1.783
2.577
3.312
3.993
4.623
5.206
5.747
6.247
6.710
Present value of an Annuity of $1 in Arrears
Periods 8%
12%
1
0.893
1.690
2.402
3.037
3.605
4.111
4.564
4.968
5.328
5.650
Project B
$24,000
$6,011
10%
0.909
1.736
2.487
3.170
3.791
4.355
4.868
5.335
5.759
6.145
5 years
$4,800
14%
0.877
1.647
2.322
2.914
4.433
3.889
4.288
4.639
4.946
5.216
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