Question
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $440,000 $525,000 Annual net
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:
| Project Soup | Project Nuts |
| Initial investment | $440,000 | $525,000 |
| Annual net income | 20,000 | 42,000 |
| Net annual cash flow | 112,500 | 116,996 |
| Estimated useful life | 8 years | 8 years |
| Salvage value | -0- | -0- |
The company requires a 10% rate of return on all new investments.
What is the approximate IRR on Project Nuts?
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Managerial Accounting
Authors: Karen Braun, Linda S Bamber
2nd Edition
136091164, 978-0136091165
