Question
Larkspur Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net
Larkspur Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net income 24000 40000 Net annual cash inflow 102000 125000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is which of the following... 51.0%. 12.0%. 25.5%. 6.0%.?
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