Sandhill Corporation is considering two alternative investments in excavating equipment. Investment A requires an initial investment of $181,600, has positive cash flows of $28,000 per year, and has an estimated salvage value of $20,600. Investment B requires an initial investment of $232,200, has positive cash flows of $32,800 per year, and has an estimated salvage value of $19,400. Each piece of equipment is expected to have a 12-year useful life. Use a financial calculator to determine the internal rate of return of each project to decide which is more desirable. (Round answers to 2 decimal places, e.g. 9.74%.) 13 Internal rate of return Investment B Investment A % 200 % is more desirable.
Sandhill Corporation is considering two alternative investments in excavating equipment. Investment A requires an initial investment of $181,600, has positive cash flows of $28,000 per year, and has an estimated salvage value of $20,600. Investment B requires an initial investment of $232,200, has positive cash flows of $32,800 per year, and has an estimated salvage value of $19,400. Each piece of equipment is expected to have a 12-year useful life. Use a financial calculator to determine the internal rate of return of each project to decide which is more desirable. (Round answers to 2 decimal places, e.g. 9.74%.) 13 Internal rate of return Investment B Investment A % 200 % is more desirable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Sandhill Corporation is considering two alternative investments in excavating equipment. Investment A requires an initial investment
of $181,600, has positive cash flows of $28,000 per year, and has an estimated salvage value of $20,600. Investment B requires an
initial investment of $232,200, has positive cash flows of $32,800 per year, and has an estimated salvage value of $19,400. Each piece
of equipment is expected to have a 12-year useful life. Use a financial calculator to determine the internal rate of return of each project
to decide which is more desirable. (Round answers to 2 decimal places, e.g. 9.74%.)
13
Internal rate of return
Investment B
Investment A
%
200
%
is more desirable.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa28a71ce-3c5d-4cbc-89de-56dd4fe2e311%2F711052f6-6f2f-4818-9935-b1920ea5531b%2Fm93o8fd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Sandhill Corporation is considering two alternative investments in excavating equipment. Investment A requires an initial investment
of $181,600, has positive cash flows of $28,000 per year, and has an estimated salvage value of $20,600. Investment B requires an
initial investment of $232,200, has positive cash flows of $32,800 per year, and has an estimated salvage value of $19,400. Each piece
of equipment is expected to have a 12-year useful life. Use a financial calculator to determine the internal rate of return of each project
to decide which is more desirable. (Round answers to 2 decimal places, e.g. 9.74%.)
13
Internal rate of return
Investment B
Investment A
%
200
%
is more desirable.
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