How find approximate internal rate of return of each project

Assignment Help Cost Accounting
Reference no: EM132715517

Dwight Donovan, the president of Rooney Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $100,000 and for Project B are $32,000. The annual expected cash inflows are $33,438 for Project A and $9,321 for Project B. Both investments are expected to provide cash flow benefits for the next five years. Rooney Enterprises' desired rate of return is 6 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Required

Problem 1: Compute the net present value of each project. Which project should be adopted based on the net present value approach?

Problem 2: Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?

Reference no: EM132715517

Questions Cloud

What is the present value of payoff : At a 10 percent required return, what is the present value of this payoff? Assume that the first payment is paid immediately.
Calculate equivalent units for direct materials : Work in process, beginning inventory 150,000 units. Calculate equivalent units for direct materials using the WA method
What types of mitigation or remediation : Describe what you think are three (3) of the most important risks to a corporate environment and what types of mitigation or remediation
Relationship between interest rates and bond prices : What is the relationship between interest rates and bond prices?
How find approximate internal rate of return of each project : How do find approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?
How much is the 2019 depreciation expense : Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $24,000 for the truck. The truck is expected to have a $4,000 residual value.
Explain the investment strategies of spy and efa : You invest 60% of your financial assets in Standard & Poor's Depository Receipts (SPY) and 40% of your financial assets in MSCI EAFE Index Fund (EFA).
Relationship between cyber security and risk management : Base on your article review and the assigned reading, discuss the relationship between cyber security and risk management.
Derive the security market line for market : What is the required return of a third security added to the market, Frontier, which has a beta of 2.0?

Reviews

Write a Review

Cost Accounting Questions & Answers

  Compute the cost of the ending inventory

Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost.

  Compute the companys prime cost for january

Compute the following amounts. The company's prime cost for January, The total manufacturing cost for January and The cost of goods manufactured for January.

  How is the recourse note allocated to partners bases

How is the $100,000 recourse note allocated to the partners bases and how is the $50,000 nonrecourse note allocated to the partners' bases?

  Companys production output capacity

Determine what Company Zs operating profit would have been if it had sold 2,100,000 units during the year, which is 100,000 more units than in the example shown in table.

  Give four examples of firms in ethiopia

Give four examples of firms in Ethiopia you believe would be significant users of cost management information and explain why. Explain in detail.

  What amount of overhead should be applied to order number

What amount of overhead should be applied to order number 100? During the month of January, the cost sheet of order number 100 indicates P20 of raw materials

  What will its average inventory level be during the year

How many units should the firm order at a time if it wants to minimize the sum of ordering and carrying costs and how many orders will it place in a year - what will its average inventory level be during the year

  Prepare projected income statements using variable costing

Sports Innovators has developed a new design to produce hurdles, Prepare projected income statements using variable costing and absorption costing.

  Relevant category of fringe benefit

Kerry is an employee of the university. She is provided with 10 giftvouchers worth $50 each for use at the local supermarket as a Christmasgift. Advise Kerry and the University of the Tax Consequences of thistransaction.

  What will be the service departments residual income

The new machine is expected to have a 10% return. What will be the service department's residual income if the investment is accepted

  What is role of risk preference in performance evaluation

Which type of cost center has a planning focus, and which type has an evaluation focus? What is the role of risk preference in performance evaluation?

  How much cost would be allocated to the machining

What would be the allocation rate and how much cost would be allocated to the Machining and Assembly Department for the operations of the month?

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