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Computing a present value factor for an annuity

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Problem - Buckeye Healthcare Corp. is proposing to spend $186,725 on an eight-year project that has estimated net cash flows of $35,000 for each of the eight years.

a. Compute the net present value, using a rate of return of 12%.

b. Based on the analysis prepared in part (a), is the internal rate of return (1) more than 12%, (2) 12%, or (3) less than 12%? Explain.

c. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the present value of an annuity table appearing.

Reference no: EM132717952

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