Question
Novak Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage
Novak Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $213,550 $42,430 7 vears $O B $240,749 $43,480 9 years $O Novak Company uses the straight-line method to depreciate its assets. Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25125. Round answers to 0 decimal places, e.g. 15%.) Click here to view the factor table. Internal rate of return Project A %
project b %
Determine whether the projects are acceptable if the required rate of return is 10%.
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