Question
Novak Company is considering three capital expenditure projects. Relevant data for the projects are as follows. ProjectInvestmentAnnual IncomeLife of Project 22A$234,000$16,3126 years23A246,60018,8829 years24A292,60016,3377 years Annual
Novak Company is considering three capital expenditure projects. Relevant data for the projects are as follows.
ProjectInvestmentAnnual
IncomeLife of
Project22A$234,000$16,3126 years23A246,60018,8829 years24A292,60016,3377 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. Novak Company uses the straight-line method of depreciation.
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(a)
Determine the internal rate of return for each project.
ProjectInternal Rate of
Return22A
%23A
%24A
%
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