Stenback Products is trying to decide which of the following projects to invest in: Project A costs $285,000 and offers eight annual net cash inflows of $58,000. Project B costs $380,000 and offers ten annual net cash inflows of $73,000. Compute the IRR of each project and use this information to identify the better investment. (Click the icon to view the present value annuity table.) (Click the icon to view the future value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value table.) First, compute the IRR of each project. The IRR for Project A is Reference Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 6.728 Period 8 7.652 Period 9 8.566 Period 10 9.471 Period 1 0.990 1.970 2.941 3.902 4.853 0.980 0.971 0.962 1.942 1.913 1.886 2.884 2.829 2.775 3.808 3.717 3.630 4.713 4.580 4.452 0.952 0.943 0.926 12% 0.909 | 0.893 14% 16% 18% 20% 0.877 0.862 1.859 1.833 1.783 2.723 2.673 2.577 4.329 3.546 3.465 4.212 3.312 3.993 0.847 0.833 1.736 1.690 1.647 1.605 1.566 1.528 2.487 2.402 2.322 2.246 2.174 2.106 3.170 | 3.037 2.914 2.798 2.690 2.589 3.791 3.605 3.433 3.274 3.127 2.991 5.795 7.722 5.601 5.417 | 5.242 4.623 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 8.983 8.530 8.111 7.360 | 6.710 | 6.145 | 5.650 5.076 4.917 4.355 | 4.111 3.889 3.685 3.498 3.326 4.288 4.039 3.812 3.605 4.639 4.344 4.078 4.946 4.607 4.303 5.216 4.833 3.837 4.031 4.494 4.192 Period 11 10.368 9.787 9.253 8.760 Period 12 11.255 10.575 9.954 9.385 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 7.904 7.103 6.424 5.842 5.342 6.002 6.142 5.575 4.910 5.468 5.008 4.611 5.092 4.675 4.533 Period 40 32.835 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413| 15.622| 14.094 12.783| 10.675 9.077 7.843 Period 30 25.808 22.396 | 19.600 17.292 15.372 13.765| 11.258 9.427 8.055 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 6.623 5.929 5.353 4.870 6.873 6.097 7.003 7.105 6.233 5.548 5.467 4.948 6.177 5.517 4.979 4.997 Reference Future Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% Period 1 1.000 1.000 1.000 1.000 1.000 8% 1.000 1.000 1.000 10% 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2.020 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.060 4.122 4.184 4.246 4.310 Period 5 5.101 5.204 5.309 5.416 5.526 4.375 4.506 5.637 5.867 4.641 4.779 4.921 5.066 5.215 5.368 6.105 6.353 6.610 6.877 7.154 7.442 Period 6 6.152 6.308 6.468 Period 7 7.214 7.434 Period 8 8.286 Period 9 9.369 Period 10 10.462 Period 11 Period 12 Period 13 14.487 Period 14 Period 15 Period 20 Period 25 Period 30 Period 40 6.633 6.802 6.975 7.336 7.716 8.115 7.662 7.898 8.142 8.394 8.923 9.487 10.089 8.583 8.892 9.214 9.549 9.897 10.637 11.436 12.300 9.755 10.159 10.583 11.027 11.491 12.488 10.950 | 11.464 | 12.006 | 12.578 | 13.181 11.567 12.169 12.808 13.486 14.207 14.972 16.645 12.683 13.412 14.192 15.026 15.917 16.870 18.977 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 | 28.029 14.947 15.974 | 17.086 18.292 | 19.599 21.015 24.215 27.975 32.393 16.097 17.293 18.599 20.024 21.579 23.276 27.152 31.772 37.280 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 146.628 186.688 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334| 181.871 249.214 342.603 471.981 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 | 241.333 356.787 530.312 790.948 1,181.882 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 7,343.858 8.536 8.977 9.442 9.930 13.579 14.776 15.937 | 17.549 10.730 13.233 14.240 16.085 19.337 11.414 12.142 12.916 15.327 16.499 17.519 19.086 20.799 21.321 23.521 25.959 18.531 20.655 23.045 25.733 28.755 32.150 21.384 24.133 27.271 30.850 34.931 39.581 32.089 36.786 42.219 48.497 37.581 43.842 43.672 50.818 59.196 51.660 60.965 72.035 Reference Present Value of $1 Periods 1% 2% 3% 4% 5% Period 1 0.990 0.980 0.971 0.962 0.952 6% 0.943 Period 2 0.980 0.961 0.943 0.925 0.907 Period 3 0.971 0.942 0.915 Period 4 0.961 0.924 0.888 0.855 Period 5 0.951 0.906 0.863 0.822 0.889 0.864 0.823 0.784 Period 6 0.942 0.888 0.837 0.790 0.746 Period 7 0.933 Period 8 0.923 0.853 Period 9 0.914 Period 10 0.905 0.871 0.813 0.760 0.711 0.789 0.731 0.677 0.627 0.837 0.766 0.703 0.645 0.592 0.500 0.820 0.744 0.676 0.614 0.558 0.463 0.386 8% 10% 12% 0.926 0.909 0.893 0.890 0.857 0.826 0.797 0.840 0.794 0.751 0.712 0.792 0.735 0.683 0.636 0.747 0.681 0.621 0.567 0.705 0.630 0.564 0.507 0.456 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.540 0.467 0.404 0.351 0.305 0.266 0.233 0.424 0.361 0.308 0.263 0.225 0.194 0.322 0.270 0.227 0.191 0.162 14% 16% 18% 20% 0.877 0.862 0.847 0.833 0.769 0.743 0.718 0.694 0.675 0.641 0.609 0.579 0.592 0.552 0.516 0.482 0.519 0.476 0.437 0.402 0.410 0.370 0.335 0.279 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.287 0.237 0.257 0.208 0.290 0.229 0.182 0.263 0.205 0.160 0.125 0.099 0.078 0.183 0.140 0.108 0.084 0.065 0.195 0.162 0.135 0.168 0.137 0.112 0.145 0.116 0.093 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.073 0.051 0.037 0.026 0.016 0.010 0.007 0.004 Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 Reference Future Value of $1 Periods 1% 2% 3% 4% 5% 6% Period 1 1.010 1.020 1.030 1.040 1.050 1.060 Period 2 1.020 1.040 1.061 1.082 1.103 Period 3 1.030 1.061 1.093 1.125 Period 4 1.041 1.082 1.126 Period 5 1.051 1.104 1.159 1.158 1.170 1.216 1.217 1.276 Period 6 1.062 1.126 1.194 Period 7 1.072 1.149 1.230 Period 8 1.083 1.172 1.267 1.369 1.477 Period 9 1.094 1.195 1.305 1.423 1.551 1.689 Period 10 Period 11 1.105 1.219 1.344 1.480 1.629 1.791 8% 10% 12% 1.080 1.100 1.120 1.140 1.124 1.166 1.210 1.254 1.300 1.191 1.260 1.331 1.405 1.482 1.561 1.262 1.360 1.464 1.574 1.689 1.811 1.939 1.338 1.469 1.611 1.762 1.925 2.100 2.288 1.265 1.340 1.419 1.587 1.772 1.974 2.195 2.436 1.316 1.407 1.504 1.714 1.949 2.211 2.502 2.826 1.594 1.851 2.144 2.476 1.999 2.358 2.773 2.159 2.594 3.106 14% 16% 18% 20% 1.160 1.180 1.200 1.346 1.392 1.440 1.643 1.728 2.074 2.488 2.700 2.986 3.185 3.583 2.853 3.278 3.759 4.300 3.252 3.803 4.435 5.160 3.707 4.411 5.234 6.192 1.116 Period 12 1.127 1.268 Period 13 1.138 1.294 Period 14 1.149 1.319 Period 15 1.161 1.243 1.384 1.539 1.710 1.346 1.426 1.601 1.796 1.469 1.665 1.886 1.513 1.732 1.980 1.558 1.801 2.079 Period 20 1.220 1.486 1.806 2.191 2.653 Period 25 1.282 1.641 2.094 Period 30 1.348 1.811 2.427 Period 40 1.489 2.208 3.262 2.666 3.386 3.243 4.322 4.801 7.040 1.898 2.332 2.853 3.479 2.012 2.518 3.138 3.896 2.133 2.720 3.452 4.363 2.261 2.937 3.797 4.887 2.397 3.172 4.177 5.474 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.772 4.226 5.117 4.818 5.936 5.492 6.886 6.261 7.988 10.147 12.839 7.138 9.266 11.974 15.407 6.176 7.430 7.288 8.916 8.599 10.699