Internal Rate of Return Method for a Service Company The Riverton Company, announced a $1,024,320 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $192,000 million in equal annual cash flows for each of the first eight years of the project life. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 0.909 1 0.943 0.893 0.870 0.833 1.736 2. 1.833 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 3.037 4 3.465 3.170 2.855 2.589 3.353 5 4.212 3.791 3.605 2.991 6 4.917 4.355 4.111 3.785 3.326 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 6.802 5.328 4.031 9 5.759 4.772 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above. % b. Identify the uncertainties that could reduce the internal rate of return of this project?
Internal Rate of Return Method for a Service Company The Riverton Company, announced a $1,024,320 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $192,000 million in equal annual cash flows for each of the first eight years of the project life. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 0.909 1 0.943 0.893 0.870 0.833 1.736 2. 1.833 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 3.037 4 3.465 3.170 2.855 2.589 3.353 5 4.212 3.791 3.605 2.991 6 4.917 4.355 4.111 3.785 3.326 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 6.802 5.328 4.031 9 5.759 4.772 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above. % b. Identify the uncertainties that could reduce the internal rate of return of this project?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 17E
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