Please solve this problem Exercise 24-7 Iggy Company is considering three capita

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Please solve this problem

Exercise 24-7 Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Annual Life of Project Investment Income Project $243,500 $17,320 6 years 271,400 20,600 9 years 283,000 15,700 7 years 22A 23A 24A 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 her view Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 10. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Internal Rate of 22A 23A 24A Return

Explanation / Answer

a Project 22A annual cash flows = 17320+(243500/6)= 57903 PV factor for Internal rate of return = 243500/57903= 4.20531 Internal rate of return=11% Project 23A annual cash flows = 20600+(271400/9)= 50756 PV factor for Internal rate of return = 271400/50756= 5.34715 Internal rate of return=12% Project 24A annual cash flows = 15700+(283000/7)= 56129 PV factor for Internal rate of return = 283000/56129= 5.04196 Internal rate of return=9% b Project 22A and 23A are acceptable

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