if ueker company s required rate of return is 11 which projects are acceptable 610730

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

Project

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Investment

Annual Income

Life of Project

22A

$240,000

$16,700

6 years

23A

270,000

20,600

9 years

24A

280,000

17,500

7 years

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. Ueker Company uses the straight-line method of depreciation.

Instructions

(a)Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals.

(b)If Ueker Company”s required rate of return is 11%, which projects are acceptable?

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