User Account

All Pages

Calculate internal rate of return of investment opportunity

Assignment Help Accounting Basics
Reference no: EM132461913

Question 1: Velma and Keota (V&K) is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a three-year useful life, will cost $10,545.35, and will generate expected cash inflows of $3,800 per year. The second investment is expected to have a useful life of five years, will cost $17,168.65, and will generate expected cash inflows of $4,300 per year. Assume that V&K has the funds available to accept only one of the opportunities. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

TABLE 2

PRESENT VALUE OF AN ANNUITY OF $1

 

 

 

 

 

 

 

n

4%                   5%

6%

7%

8%

9%

10%

12%

14%

16%

20%

1

0.961538           0.952381

0.943396

0.934579

0.925926

0.917431

0.909091

0.892857

0.877193

0.862069

0.833333

2

1.886095           1.859410

1.833393

1.808018

1383265

1.759111

1335537

1.690051

1.646661

1.605232

1.527778

3

2.775091           2.723248

2.673012

2.624316

2.577097

2.531295

2.486852

2.401831

2.321632

2.245890

2106481

4

3.629895           3.545951

3.465106

3.387211

3.312127

3.239720

3169865

3.037349

2.913712

2798181

2.588735

5

4.451822           4.329477

4.212364

4100197

3.992710

3.889651

3390787

3.604776

3.433081

3.274294

2.990612

6

5.242137           5.075692

4.917324

4766540

4.622880

4.485919

4.355261

4111407

3.888668

3.684736

3.325510

7

6.002055            5386373

5.582381

5.389289

5.206370

5.032953

4.868419

4.563757

4.288305

4.038565

3.604592

8

6332745           6.463213

6.209794

5.971299

5746639

5.534819

5.334926

4.967640

4.638864

4.343591

3.837160

9

7.435332            7107822

6.801692

6.515232

6.246888

5.995247

5.759024

5.328250

4.946372

4.606544

4.030967

10

8110896            7721735

7.360087

7.023582

6310081

6.417658

6144567

5.650223

5.216116

4.833227

4192472

11

8360477           8.306414

7.886875

7.498674

7138964

6.805191

6.495061

5.937699

5.452733

5.028644

4.327060

12

9.385074           8.863252

8.383844

7.942686

7.536078

7160725

6.813692

6194374

5.660292

5197107

4.439217

13

9.985648           9.393573

8.852683

8.357651

7.903776

7.486904

7103356

6.423548

5.842362

5.342334

4.532681

14

10.563123           9.898641

9.294984

8345468

8.244237

7386150

7.366687

6.628168

6.002072

5.467529

4.610567

15

11118387           10.379658

9712249

9107914

8.559479

8.060688

7.606080

6.810864

6142168

5.575456

4.675473

16

11.652296         10.837770

10105895

9.446649

8.851369

8.312558

7.823709

6.973986

6.265060

5.668497

4729561

17

12165669         11.274066

10.477260

9.763223

9121638

8.543631

8.021553

7119630

6.372859

5.748704

4.774634

18

12.659297         11.689587

10.827603

10.059087

9.371887

8.755625

8.201412

7.249670

6.467420

5.817848

4.812195

19

13133939         12.085321

11158116

10.335595

9.603599

8.905115

8.364920

7.365777

6.550369

5.877455

4.843496

20

13.590326         12.462210

11.469921

10.594014

9.818147

9128546

8.513564

7.469444

6.623131

5.928841

4.869580

Required

Question A. Calculate the internal rate of return of each investment opportunity. (Do not round intermediate calculations.)

 

Question B. Based on the internal rates of return, which opportunity should V&K select?

Reference no: EM132461913

Questions Cloud

What would be the predicted stock return for a company : What would be the predicted stock return for a company whose CEO made? $15 million?
Determine the payback period for each investment : Determine the payback period for each investment alternative and identify the alternative Franklin should accept if the decision is base on the payback approach
Determine the payback period for each investment : Determine the payback period for each investment alternative and identify the alternative Franklin should accept if the decision is base on the payback approach
Run a regression of wage on experience : Run a regression of wage on experience. That is, where wage is the dependent variable. Use 4-decimals throughout your answers.
Calculate internal rate of return of investment opportunity : Calculate the internal rate of return of each investment opportunity?Based on the internal rates of return, which opportunity should V&K select?
Estimate the present value of the tax benefits : The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $156,000. Estimate the present value of the tax benefits
Why would client batch and send invoices : Determine and Why would your client batch and send invoices for unbilled activity instead of automatically invoicing for unbilled activity?
Determine the tax consequences of the cash distribution : Determine the tax consequences of the cash distribution in each of the independent? situations:Current? E&P of $12,000?; accumulated? E&P of $28,000.
What is the probability of taking out two blue marbles : What is the probability of taking out two blue marbles and one green marble?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd