The ATS corp. has recently evaluated a proposal to invest in cost-reducing production technology. According to the evaluation, the project would require an initial investment of 18,000 and would provide equal annual cost savings for five years. Based on a 10 percent discount rate, the project generates a net present value of 1,788. The project is not expected to have any salvage at the end of its five-year life. What is the project’s expected internal rate of return?

The ATS corp. has recently evaluated a proposal to invest in cost-reducing production technology. According to the evaluation, the project would require an initial investment of 18,000 and would provide equal annual cost savings for five years. Based on a 10 percent discount rate, the project generates a net present value of 1,788. The project is not expected to have any salvage at the end of its five-year life. What is the project’s expected internal rate of return?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...

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