he Umbrella company is planning to purchase a substance known as Serum Serum A would cost $45,000 and would have a useful life of 10 years with ero salvage value. The expected annual cash flow of the serum is $9,500. anagement wants a 20% return on all investments. Use the provided prese alue tables for this question. If you use excel or a different table your nswer will be marked incorrect by the quiz autograder. equired: . Compute the internal rate of return (IRR) for Serum X. Your answer shoul be in numberical form (DO NOT include the percentage sign) and will be
he Umbrella company is planning to purchase a substance known as Serum Serum A would cost $45,000 and would have a useful life of 10 years with ero salvage value. The expected annual cash flow of the serum is $9,500. anagement wants a 20% return on all investments. Use the provided prese alue tables for this question. If you use excel or a different table your nswer will be marked incorrect by the quiz autograder. equired: . Compute the internal rate of return (IRR) for Serum X. Your answer shoul be in numberical form (DO NOT include the percentage sign) and will be
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter26: Capital Budgeting (capbud)
Section: Chapter Questions
Problem 5R
Related questions
Question
Transcribed Image Text:Periods
(2)
912345
8901
10
11
12
13
14
15
16
17
18
19
20
Periods
(n)
1
234567
8
9
10
11
12
13
14
15
16
17
18
19
20
Interest rates (1)
5%
6%
8%
10%
2%
0.980
0.952 0.943
0.926
0.909
0.980
0.961 0.943
0.857
0.842 0.826
0.971
0.794
0.772 0.751
0.961
0.747
0.621
0.564
0.907 0.890 0.873
0.942 0.915 0.889 0.864 0.840 0.816
0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683
0.951 0.906 0.863 0.822 0.784
0.713 0.681 0.650
0.942 0.888 0.837 0.790 0.746 0705 0.666 0.630 0.596
0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547
0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502
0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460
0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422
0.585 0.527 0.475 0.429 0.388
0.905
0.896
0.804
0.650
0.887
0.788
0.397 0.356
0.879
0.773
0.444
0.415
0.388 0.340 0.299
0.368 0.326
0.870 0.758
0.861
0.362 0.315
0.743
0.853 0.728
0.339
0.844 0.714
0.836 0.700 0.587
0.828 0.686 0.570 0.475
0.820 0.673 0.554 0.456
1%
0.990
4%
3%
0.971 0.962
0.925
0.286
0.258
0.722
0.701
0.681
0.625 0.557 0.497
0.601 0.530 0.469
0.505 0.442
0.481 0.417
0.623 0.534 0.458 0.394
0.661 0.577
0.642 0.555
0.605 0.513
0.436
0.494 0.416
0.396
0.331
0.377 0.312
Interest rates (r)
15%
13%
14%
0.885
0.877
0.783
0.769
0.693 0.675 0.658
0.371
0.350
0.870
0.756
0.163
0.141
0.123
0.170 0.146 0.125 0.108
0.153
0.130 0.111 0.095
0.138 0.116 0.098 0.083
0.124 0.104 0.087 0.073 0.061
7%
0.935
0.168
0.145
0.125
11%
12%
16%
17%
20%
0.901 0.893
0.862
0.855
0.833
0.743 0.731
0.694
0.609 0.593
0.579
0.812 0.797
0.731 0.712
0.641 0.624
0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482
0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402
0.535 .0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352
0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296
0.434 0.404 0.376 0.351 0.327 0.305
0.391 0.361 0.333 0.308 0.284 0.263
0.352 0.322 0.295 0.270 0.247 0.227
0.335
0.279
0.285 0.266 0.249 0.233
0.194
0.243
0.225 0.209
0.317 0.287
0.261
0.237
0.215 0.195
0.257
0.231
0.208
0.187
0.229
0.204
0.182
0.232 0.205
0.181
0.160
0.209 0.183
0.160 0.140
0.108
0.188 0.163
0.141 0.123 0.107 0.093
0.093
0.080
0.069
0.081
0.070 0.060
0.051
9%
0.917
0.292 0.252
0.317 0.270 0.231
0.296 0.250 0.212
0.277 0.232 0.194
0.258
0.215
0.178
0.290
0.263
0.275 0.239
0.208
0.178
18%
19%
0.847 0.840
0:718 0.706
0.191 0.176
0.162 0.148
0.152
0.137
0.124
0.130 0.116
0.111
0.513
0.467
0.424
0.386
0.350
0.319
0.104
0.099 0.088
0.095 0.084 0.079
0.081 0.071
0.062
0.052
0.069
0.060
0.059
0.051 0.044
0.051 0.043 0.037
0.043 0.037 0.031
0.218
0.198
0.180
0.164
0.149
0.162
0.135
0.112
0.093
0.078
0.065
0.054
0.045
0.038
0.031
0.026
Transcribed Image Text:The Umbrella company is planning to purchase a substance known as Serum
A. Serum A would cost $45,000 and would have a useful life of 10 years with
zero salvage value. The expected annual cash flow of the serum is $9,500.
Management wants a 20% return on all investments. Use the provided present
value tables for this question. If you use excel or a different table your
answer will be marked incorrect by the quiz autograder.
Required:
1. Compute the internal rate of return (IRR) for Serum X. Your answer should
be in numberical form (DO NOT include the percentage sign) and will be
enter as between two percentages
o Between
%
% and
2. Should Umbrella company invest in Serum X based on it's required rate of
return of 20%? Enter your answer as Yes or No.
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