Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows: Annual

Question:

Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows:

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. Summer Company uses the straight-line method of depreciation.
Instructions
(a) Determine the internal rate of return for each project.
(b) Determine which projects are acceptable if Summer Company's required rate of return is 11%.

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...