Exercise 24-7

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

Project		Investment		Annual Income		Life of Project
22A		$244,500		$17,490		6 years
23A		274,400		20,770		9 years
24A		282,900		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. Click here to view PV table. (a) 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 Return

(b) If Iggy Companys required rate of return is 11%, which projects are acceptable?

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 22A $244,500 $17,490 6 years 23A 274,400 20,770 9 years 24A 282,900 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. Click here to view PV table (a) 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.) Internal Rate of Project Return 23A 24A (b) If Iggy Company's required rate of return is 11%, which projects are acceptable? The following project(s) are acceptabli 22A Click if you would like to show Wo 24A Open Show Work 22A, 23A and 24A 23A and 24A 23A 22A and 23A of 5 used SAVE FOR LATER. 22A and 24A SUBMIT