a. The present worth of the project is $1,367. b. The internal rate of return of the project is 12.9%. c. The annual worth of the project is -$632. d. The benefit-cost ratio of the project is 1.08. e. The future worth of the project is $3.75. f. The external rate of return of the project is 15.3%. g. The present worth of the project is -$47. h. The internal rate of return of the project is 14.7%. i. The annual worth of the project is $6,775. j. The benefit-cost ratio of the project is 0.97. k. The future worth of the project is –$13,470. 1. The external rate of return of the project is 3.7%. m. For the cases (if any) in which “do nothing" was preferred, what assumption is being made about the return generated by the "uninvested" funds? n. Is it possible that the values stated in (a) and (b) were correctly calculated on the same project? If not, why? o. Is it possible that the values stated in (c) and (d) were correctly calculated on the same project? If not, why? p. What do you know must be true about the present worth for the project in (j)? q. What do you know must be true about the internal rate of return for the project in (j)?

a. The present worth of the project is $1,367. b. The internal rate of return of the project is 12.9%. c. The annual worth of the project is -$632. d. The benefit-cost ratio of the project is 1.08. e. The future worth of the project is $3.75. f. The external rate of return of the project is 15.3%. g. The present worth of the project is -$47. h. The internal rate of return of the project is 14.7%. i. The annual worth of the project is $6,775. j. The benefit-cost ratio of the project is 0.97. k. The future worth of the project is –$13,470. 1. The external rate of return of the project is 3.7%. m. For the cases (if any) in which “do nothing" was preferred, what assumption is being made about the return generated by the "uninvested" funds? n. Is it possible that the values stated in (a) and (b) were correctly calculated on the same project? If not, why? o. Is it possible that the values stated in (c) and (d) were correctly calculated on the same project? If not, why? p. What do you know must be true about the present worth for the project in (j)? q. What do you know must be true about the internal rate of return for the project in (j)?

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 1BE: Average rate of return Determine the average rate of return for a project that is estimated to yield...

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