Question
Management of Crane Automotive, a manufacturer of auto parts, is considering investing in two projects. The company typically compares project returns to a cost of
Management of Crane Automotive, a manufacturer of auto parts, is considering investing in two projects. The company typically compares project returns to a cost of funds of 17.00 percent.
| Year | Project 1 | Project 2 | ||||
| 0 | - $462,015 | - $515,862 | ||||
| 1 | 283,000 | 123,750 | ||||
| 2 | 121,000 | 165,170 | ||||
| 3 | 115,500 | 236,700 | ||||
| 4 | 132,000 | 305,050 | ||||
Compute the IRRs based on the cash flows. Which project(s) will be accepted? (Round final answer to 2 decimal places, e.g. 15.25%.)
| The IRR of project 1 is % and the project should be rejectedaccepted. |
| The IRR of project 2 is % and the project should be acceptedrejected. |
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Accounting Information For Business Decisions
Authors: Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh, Geoff Slaughter, Sharelle Simmons
2nd Edition
0170253708, 978-0170253703
