Present value of an Annuity of $1 in Arrears Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 1.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2.487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.452 4.212 3.993 3.791 3.605 3.433 6 5.242 4.917 4.623 4.355 4.111 3.889 7 6.002 5.582 5.206 4.868 4.564 4.288 8 6.733 6.210 5.747 5.335 4.968 4.639 9 7.435 6.802 6.247 5.759 5.328 4.946 10 8.111 7.360 6.710 6.145 5.650 5.216 Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will be depreciated at $75,750 per year over its seven year life. What is the internal rate of return? a.6% b.14% c.10% d.12% e.8%
Present value of an Annuity of $1 in Arrears Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 1.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2.487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.452 4.212 3.993 3.791 3.605 3.433 6 5.242 4.917 4.623 4.355 4.111 3.889 7 6.002 5.582 5.206 4.868 4.564 4.288 8 6.733 6.210 5.747 5.335 4.968 4.639 9 7.435 6.802 6.247 5.759 5.328 4.946 10 8.111 7.360 6.710 6.145 5.650 5.216 Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will be depreciated at $75,750 per year over its seven year life. What is the internal rate of return? a.6% b.14% c.10% d.12% e.8%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Present value of an Annuity of $1 in Arrears
Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will bedepreciated at $75,750 per year over its seven year life. What is the internal rate of return ?
| Periods | 4% | 6% | 8% | 10% | 12% | 14% | ||||||
| 1 | 0.962 | 0.943 | 0.926 | 0.909 | 0.893 | 0.877 | ||||||
| 2 | 1.886 | 1.833 | 1.783 | 1.736 | 1.690 | 1.647 | ||||||
| 3 | 2.775 | 2.673 | 2.577 | 2.487 | 2.402 | 2.322 | ||||||
| 4 | 3.630 | 3.465 | 3.312 | 3.170 | 3.037 | 2.914 | ||||||
| 5 | 4.452 | 4.212 | 3.993 | 3.791 | 3.605 | 3.433 | ||||||
| 6 | 5.242 | 4.917 | 4.623 | 4.355 | 4.111 | 3.889 | ||||||
| 7 | 6.002 | 5.582 | 5.206 | 4.868 | 4.564 | 4.288 | ||||||
| 8 | 6.733 | 6.210 | 5.747 | 5.335 | 4.968 | 4.639 | ||||||
| 9 | 7.435 | 6.802 | 6.247 | 5.759 | 5.328 | 4.946 | ||||||
| 10 | 8.111 | 7.360 | 6.710 | 6.145 | 5.650 | 5.216 |
Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will be
a.6%
b.14%
c.10%
d.12%
e.8%
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