Internal Rate of Return MethodThe internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves aninvestment of $66,808 and annual net cash flows of $14,000 for each of the nine years of its useful life.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.8331.8331.7361.6901.6261.5282.6732.4872.4022.2832.10643.4653.1703.0372.8552.5894.2123.7913.6053.3522.9916.4.9174.3554.1113.7843.3265.5824.8684.5644.1603.60586.2105.3354.9684.4873.8376.8025.7595.3284.7724.031107.3606.1455.6505.0194.192a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, roundyour answer to three decimal places.b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of returnfor the proposal.%2.

Internal rate of return (IRR) of an alternative refers to the rate at which the Net present value…

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. b. 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.

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. b. 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.

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 16E

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