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marissa [1.9K]
2 years ago
12

​Lithium, Inc. is considering two mutually exclusive​ projects, A and B. Project A costs​ $95,000 and is expected to generate​ $

65,000 in year one and​ $75,000 in year two. Project B costs​ $120,000 and is expected to generate​ $64,000 in year​ one, $67,000 in year​ two, $56,000 in year​ three, and​ $45,000 in year four.​ Lithium, Inc.'s required rate of return for these projects is​ 10%. The internal rate of return for Project A is:
Business
1 answer:
Flauer [41]2 years ago
4 0

Answer: The internal rate of return for project A is $26,074.38

Explanation:

Using the formula

R1/(1+K)^1 R2/(1+K)^2+ - - - Rn/(1+K)^n -

C =0

Where C = capital outlay, K=Rate of interest, R=Net cash flow

Given that K=10%, (10/100)=0.1 R1=$65,000, R2=$75,000 C =$95,000

Project A

65,000/(1+0.1)^1 + 75,000/(1+0.1)^2 - 95,000

65,000/(1.1)^1 +75,000/(1.1)^2 - 95,000

59090.91 + 61983.47 - 95,000

121074.38 - 95000

= $26,074.38

Project B

R1=$64,000, R2=$67,000,R3=$56,000, R4=$45,000 C =$120,000

64,000/(1+0.1)^1+ 67,000/(1+0.1)^2+ 56,000/(1+0.1)^3 + 45,000/(1+0.1)^4 - 120,000

64,000/(1.1)^1 + 67,000/(1.1)^2 + 56,000/(1.1)^3 + 45,000/(1.1)^4 - 120,000

58181.82 + 55371.90 + 42073.63 + 30735.61 - 120,000

= 186362.96 - 120,000

= $66,362.96

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Bramble Corp. reported the following items for 2016: Income tax expense $62000 Contribution margin 180000 Controllable fixed cos
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Corporate Fund started the year with a net asset value of $14.00. By year-end, its NAV equaled $13.20. The fund paid year-end di
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What was the rate of return to an investor in the fund?

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Answer:

Dr Seller Account $100

Cr Buyer Account      $100

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The property sold on 15th of the month by Mr. A to Mr. B and the utility bill received later of this month would be split between Mr. A and Mr. B. The basis for the split of the utility bills would be the share that Mr. A utilized the facilities and in this scenario, it is $100. Hence the buyer Mr. B has receivable of $100 and the seller Mr. A has a liability payable of $100 amount.

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