Madison Company is considering two investments. The relevant data follows:
|Annual cash savings (end of year)||50,692||60,995|
|Terminal salvage value||50,000||70,000|
|Estimated useful life in years||5||5|
|Minimum desired rate of return||10%||10%|
|Method of depreciation||SL||SL|
|PV of 1%||PV of Annuity|
|for 5 Periods||for 5 Periods|
Ignoring taxes, the internal rate of return for Project A is approximately . SHOW WORK.
Capital budgeting is the process of evaluating long term investment decisions through the use of different tools and techniques like Net Present Value, Payback Period, Account Rate of Return, Internal Rate of Return and Profitability Index.
Answer and Explanation:
Calculation of Internal Rate of Return is Below...
|Years||CashFlows A||CashFlows B|
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from Corporate Finance: Help & ReviewChapter 3 / Lesson 13