The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. Use this information to solve, The IRR for Alternative A is most nearly: (a) 30% (b) 15% (c) 36% (d) 10% (e) 20%. TABLE P6-82 Data for Problems 6-82 through 6-85ABDECapital investmentAnnual expensesAnnual revenues$90,00040,00052,00015,000$60,000$40,00025,00038,00010,00030.8%$30,00015,00028,00010,000$70,00030,00035,00050,00045,000Market value at EOY 1010,00015,000IRR???7.4%42.5%9.2%

IRR is that rate of return that makes the worth of future cash flows equal to the existing worth.

TABLE P6-82 Data for Problems 6-82 through 6-85 A B D E Capital investment Annual expenses Annual revenues $90,000 40,000 52,000 15,000 $60,000 $40,000 25,000 38,000 10,000 30.8% $30,000 15,000 28,000 10,000 $70,000 30,000 35,000 50,000 45,000 Market value at EOY 10 10,000 15,000 IRR ??? 7.4% 42.5% 9.2%

TABLE P6-82 Data for Problems 6-82 through 6-85 A B D E Capital investment Annual expenses Annual revenues $90,000 40,000 52,000 15,000 $60,000 $40,000 25,000 38,000 10,000 30.8% $30,000 15,000 28,000 10,000 $70,000 30,000 35,000 50,000 45,000 Market value at EOY 10 10,000 15,000 IRR ??? 7.4% 42.5% 9.2%

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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