Figure 14-11.

Present value of an Annuity of $1 in Arrears

Periods	4%	6%	8%	10%	12%	14%
1	0.962	0.943	0.926	0.909	0.893	0.877
2	1.886	1.833	1.783	1.736	1.690	1.647
3	2.775	2.673	2.577	2.487	2.402	2.322
4	3.630	3.465	3.312	3.170	3.037	2.914
5	4.452	4.212	3.993	3.791	3.605	4.433
6	5.242	4.917	4.623	4.355	4.111	3.889
7	6.002	5.582	5.206	4.868	4.564	4.288
8	6.733	6.210	5.747	5.335	4.968	4.639
9	7.435	6.802	6.247	5.759	5.328	4.946
10	8.111	7.360	6.710	6.145	5.650	5.216

Problem 14-15

Refer to Figure 14-11. Cleves Company is considering two projects.

	Project X		Project Y
Initial investment	$500,000		$100,000
Annual cash flows	$88,500		$34,320
Life of the project	10 years		4 years
Depreciation per year	$50,000		$25,000

Cleves requires a minimum rate of return of 8 percent.

Required:

A. What is the accounting rate of return for each project? If required, round your answers to two decimal places.

Project X, ARR	%
Project Y, ARR	%

B. What is the net present value for each project?

Project X, NPV	$
Project Y, NPV	$

C. What is the internal rate of return for each project?

Project X, IRR	%
Project Y, IRR	%

D. Given that only one project can be selected, which project should be chosen?