Question
Two capital investments are under consideration. Excel has been used to calculate the internal rate of return for each, with the results below: A B
Two capital investments are under consideration. Excel has been used to calculate the internal rate of return for each, with the results below:
| A | B |
1 | -90,000 | -90,000 |
2 | 32,000 | 29,000 |
3 | 25,000 | 26,000 |
4 | 26,000 | 24,000 |
5 | 24,000 | 24,000 |
6 | 27,000 | 19,000 |
7 | 15% | 12% |
If the company's hurdle rate is 14%, which of the following is true?
Group of answer choices
Only proposal A should be accepted.
Both proposal A and proposal B should be accepted.
Both proposal A and proposal B should be rejected.
Only proposal B should be accepted.
A capital investment under consideration requires an initial investment of $100,000. The asset purchased will be used for 5 years. Depreciation is computed using straight-line, with no residual value. Income from operations, depreciation expense, and net cash inflows for each of the five years is:
Year | Net cash inflows |
1 | $40,000 |
2 | 35,000 |
3 | 55,000 |
4 | 80,000 |
5 | 62,000 |
Which is the correct way to enter this information into an Excel spreadsheet to compute internal rate of return?
Group of answer choices
| A |
1 | -100,000 |
2 | 40,000 |
3 | 35,000 |
4 | 55,000 |
5 | 80,000 |
6 | 62,000 |
| A |
1 | 40,000 |
2 | 35,000 |
3 | 55,000 |
4 | 80,000 |
5 | 62,000 |
6 | 100,000 |
| A |
1 | 100,000 |
2 | -40,000 |
3 | -35,000 |
4 | -55,000 |
5 | -80,000 |
6 | -62,000 |
| A |
1 | 62,000 |
2 | 80,000 |
3 | 55,000 |
4 | 35,000 |
5 | 40,000 |
6 | 0 |
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