For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order of alternatives from least capital investment to greatest capital investment is Do Nothing → A→ C → B. Complete the IRR analysis by selecting the preferred alternative.The IRR of A (C→ B) is%. (Round to one decimal place.)A Capital investmentA Annual revenuesA Annual costsA Market valueA IRRDo Nothing → A- $15,0004,000- 1,0006,00012.7%A → C- $2,000900-150-2,22010.5%C → B-$3.500460-753.500???

IRR is the rate at which capital investment equals the annual cash inflows and the salvage value.

Answered: The IRR of A (C → B) is%. (Round to one…

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The IRR of A (C → B) is%. (Round to one decimal place.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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Question

For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order of alternatives from least capital investment to greatest capital investment is Do Nothing → A
→ C → B. Complete the IRR analysis by selecting the preferred alternative.
The IRR of A (C→ B) is%. (Round to one decimal place.)
A Capital investment
A Annual revenues
A Annual costs
A Market value
A IRR
Do Nothing → A
- $15,000
4,000
- 1,000
6,000
12.7%
A → C
- $2,000
900
-150
-2,220
10.5%
C → B
-$3.500
460
-75
3.500
???

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