Part Six

APPLY THE CONCEPTS: Internal rate of return

The McCall purchasing department has made revisions to their costs and annual cash flows for Project A and Project B, as outlined below.
Project A	Project B
Project A's revised investment is $196,400. The project's life and cash flow have changed to 5 years and $50,500, respectively, while expenses have been eliminated.	Project B's revised investment is $115,600. The project's life and cash flow have changed to 6 years and $80,000 while expenses reduced slightly to $55,000.

Compute the internal rate of return factor for Project A and Project B and then identify each project's corresponding percentage from the PV ordinary annuity table.

Note: Enter the IRR factor, to 5 decimal places.

Project A: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %

Project B: The calculated IRR factor is and this value corresponds to which percentage in the present value of ordinary annuity table? %