ssuming a six-year time horizon, what is the internal rate of return of the remodeling project? Calculate sing both present value factors and separately using Excel's IRR function. Annual cash flow: Revenue Less costs: Other than depreciation Depreciation Income before taxes Income tax expense Net income Add depreciation 110,000.00 10,000.00 58,333 41,667 8,333 33,333.33 58.333

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...
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Indicate how the internal rate of return is calculated using the factor. (answer is in % format)

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Assuming a six-year time horizon, what is the internal rate of return of the remodeling project? Calculate
sing both present value factors and separately using Excel's IRR function.
Annual cash flow:
Revenue
Less costs:
Other than depreciation
Depreciation
Income before taxes
Income tax expense
Net income
Add depreciation
Cash flow
Present value factor:
$ 350,000
+
$ 91,667
=
110,000.00
$
10,000.00
58,333
41,667
8,333
33,333.33
58,333
91,667
3.82 factor
Indicate how the Internal rate of return is calculated using the factor arrived at above.
%
Transcribed Image Text:Required Assuming a six-year time horizon, what is the internal rate of return of the remodeling project? Calculate sing both present value factors and separately using Excel's IRR function. Annual cash flow: Revenue Less costs: Other than depreciation Depreciation Income before taxes Income tax expense Net income Add depreciation Cash flow Present value factor: $ 350,000 + $ 91,667 = 110,000.00 $ 10,000.00 58,333 41,667 8,333 33,333.33 58,333 91,667 3.82 factor Indicate how the Internal rate of return is calculated using the factor arrived at above. %
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