Business
Business, 24.05.2021 14:00, lauren203

Pina Colada Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts
Initial investment $400000 $600000
Annual net income 38000 54000
Net annual cash inflow 114000 140000
Estimated useful life 5 years 6 years
Salvage value 0 0

The company requires a 10% rate of return on all new investments.

Present Value of an Annuity of 1

Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111

The annual rate of return for Project Soup is:

a. 9.5%.
b. 19.0%.
c. 57.0%.
d. 28.5%.

answer
Answers: 1

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