BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Internal rate of return

A project is estimated to cost $90,045 and provide annual net cash flows of $14,500 for eight years. Determine the internal rate of return for this project, using Exhibit 5.

To determine

Internal rate of return method:

Internal rate of return method is the one of the capital investment method which determines the rate of return wherein the net present value of all the cash flows (both positive and negative) from an investment is zero. This method also called as the time-adjusted rate of return method, and it used to evaluate the different proposal’s expected rate of return.

To determine: The internal rate of return for the given project

Explanation

When the annual cash flows are equal, the internal rate of return can be determined as follows:

Step 1: Determine a present value factor for an annuity of $1 is as follows:

Present value factor for an annuity of $1}=Amount to be investedEqual annual net cash 

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the advantages of a sole proprietorship?

Foundations of Business (MindTap Course List)

NPV AND IRR A store has 5 years remaining on its lease in a mall. Rent is 2,000 per month, 60 payments remain, ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is the primary purpose of a Mock split?

Survey of Accounting (Accounting I)