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Determine the internal rate of return for each project

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Reference no: EM132771653

Question - Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows.

Project Investment Annual

Income Life of Project 22A $240,000 $15,500 6 years

23A 270,000 20,600 9 years

24A 280,000 15,700 7 years

Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation.

Instructions -

1. Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals.

2. If Iggy Company's required rate of return is 10%, which projects are acceptable? Calculate annual rate of return.

Reference no: EM132771653

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