Calculate the internal rate of return

Assignment Help Cost Accounting
Reference no: EM132890761

Question - Project Evaluation - Consider the cash flows for the two projects below:

 

Project A

Project B

Initial cash outlay

$10,000

$50,000

Net cash inflows-year 1

$5,000

$22,000

Net cash inflows-year 2

$5,000

$22,000

Net cash inflows-year 3

$5,000

$22,000

The company uses a discount rate of 10% for evaluating projects.

Required -

a. Using the tables, calculate the net present value for the two projects. Which project yields the greater NPV?

b. Using the tables, calculate the internal rate of return (IRR) for the two projects. Which project has the higher rate of return?

c. Why does the ranking per NPV favor project B over project A even though project A is more profitable per the IRR criterion?

Reference no: EM132890761

Questions Cloud

Culture of volkswagen created ethical scandal : Explain how the culture of Volkswagen created this ethical scandal. While Volkswagen claimed to support ethics and sustainability,
Find the number of boxes of candy : The total profit (in hundreds of dollars) from the sale of x hundred boxes of candy is given by
Major issues that are important in organizational design : Describe two major issues that are important in organizational design
What symptoms are associated with anaphylactic shock : Discuss what symptoms are associated with anaphylactic shock and how the nurse differentiates these from other conditions or issues.
Calculate the internal rate of return : Using the tables, calculate the internal rate of return (IRR) for the two projects. Which project has the higher rate of return
Internationalization process of a technology-based company : Is there a right time and manner to move forward with the internationalization process of a technology-based company? Or should technology-based companies be 'b
Discuss characteristic findings of immune dysfunction : What symptomology the patient would exhibit and how these symptoms may complicate daily living and relationships. Discuss characteristic findings of immune.
What are the directional strategies of pfizer : What are the directional strategies of Pfizer
Minimize unethical behavior of local managers-workers : What will you do asa Senior Leader of the facility to minimize the unethical behavior of local managers and workers? Be strategic and tactical to bring change.

Reviews

Write a Review

Cost Accounting Questions & Answers

  What formula to determine the total maintenance cost

Hartwell Company distributes service department overhead costs based on the reciprocal method, what would be the formula to determine the total maintenance cost

  How much of central office cost would be allocated to resort

Woodland Hotels Inc. operates four resorts in the heavily wooded areas. How much of the central office costs would be allocated to each resort?

  How martin co can improve its business volumes

Prompt how MARTIN CO can improve its business volumes, expenses and benefits utilizing Value Analysis and Functional Analysis

  Balance sheet of patriot company

Illustrate how the information above should be shown on the balance sheet of Patriot Company

  How much overhead costs were applied

How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing

  Difference in allocation of liabilities

Illustrate the difference in allocation of liabilities to these three partners - Explain the difference in recourse and nonrecourse liabilities when distinguishing between general and limited partners

  Which cvp analysis can

In the situation of multiple cost drivers, CVP analysis can? be modified so that various simple formulas can be used by applying them separately to each cost

  Calculate the companys weighted average cost of capital

You need to calculate the company's weighted average cost of capital. using the dividend discount model.

  What will be the journal entry for the issuance

Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $212 per share.

  Calculate the net present value of new manufacturing plant

Calculate the net present value of the new manufacturing plant.

  Compute the budgeted maintenance cost in the month of May

The total maintenance costs of Golden Company in the last four months are presented as follows. Compute the budgeted maintenance cost in the month of May

  Calculate the risk of a stock-out during a lead time

If the hospital reorders when the surgical gloves on hand and on order is 12 boxes, calculate the risk of a stock-out during a lead time.

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!

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