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
|
$242,300
|
$17,450
|
6 years
|
|
23A
|
274,200
|
20,920
|
9 years
|
|
24A
|
281,700
|
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.
(a) Determine the internal rate of return for each project.
(b) If Iggy Company's required rate of return is 11%, which projects are acceptable?
Attachment:- Question.rar