Internal rate of return method for a service companyVail Resorts, Inc. (MTN), announced a $1,052,238 million expansion of lodging properties, ski lifts, and terrain inPark City, Utah. Assume that this investment is estimated to produce $214,000 million in equal annual cash flows foreach of the first 6 years of the project life.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%10.943 0.9090.893 0.8700.83321.833 1.736 1.690 1.626 1.5283 2.673 2.487 2.402 2.283 2.10643.465 3.170 3.037 2.855 2.58954.212 3.791 3.605 3.353 2.99164.917 4.355 4.111 3.785 3.3267 5.582 4.868 4.564 4.1603.6058 6.210 5.335 4.9684.4873.83796.802 5.759 5.3284.77210 7.360 6.145 5.6505.0194.0314.192a. Determine the expected internal rate of return of this project for 6 years, using the present value of an annuity of$1 table above.%b. Identify the uncertainties that could reduce the internal rate of return of this project?All of theseFeedback?

IRR, or internal rate of return, is a metric used in financial analysis to estimate the…

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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 17E

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Internal Rate of Return Method for a Service Company The Riverton Company, announced a $570,505 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $131,000 million in equal annual cash flows for each of the first six years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 12% 15% 1 2 3 4 5 6 7 8 9 10 6% 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 10% 0.909 0.893 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.605 4.355 4.111 4.868 5.335 5.759 6.145 4.564 4.968 5.328 5.650 0.870 1.626 2.283 2.855 3.353 3.785 4.160 4.487 4.772 5.019 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 a. Determine the expected internal rate of return of this project for six years, using the present value of an annuity of $1 table above. % b. Identify the uncertainties that could reduce the internal rate of return of this project?
Internal Rate of Return Method for a Service Company The Riverton Company, announced a $645,535 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estim produce $121,000 million in equal annual cash flows for each of the first eight years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 6. 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above. % b. Identify the uncertainties that could reduce the internal rate of return of this project? 1.
Internal Rate of Return Method for a Service Company The Riverton Company, announced a $1,024,320 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $192,000 million in equal annual cash flows for each of the first eight years of the project life. Present Value of an Annuity of $1 at Compound Interest 15% Year 6% 10% 12% 20% 0.909 1 0.943 0.893 0.870 0.833 1.736 2. 1.833 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 3.037 4 3.465 3.170 2.855 2.589 3.353 5 4.212 3.791 3.605 2.991 6 4.917 4.355 4.111 3.785 3.326 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 6.802 5.328 4.031 9 5.759 4.772 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above. % b. Identify the uncertainties that could reduce the internal rate of return of this project?
Internal Rate of Return Method The Canyons Resort, a Utah ski resort, announced a $692,160 expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $192,000 in equal annual cash flows for each of the first five years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the expected internal rate of return of this project for five years, using the present value of an annuity of $1 table above. In your calculation, round the net present value factor to three decimal places.fill in the blank 1 %
Internal Rate of Return Method for a Service Company The Riverton Company, a Utah ski resort, recently announced a $487,751 expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $121,000 in equal annual cash flows for each of the first nine years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for nine years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent.fill in the blank % b. What are some…
Internal Rate of Return Method for a Service Company The Riverton Company, a Utah ski resort, recently announced a $470,340 expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $108,000 in equal annual cash flows for each of the first six years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for six years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent. % b. What are some uncertainties that could reduce the internal rate of return of this…
Internal Rate of Return Method for a Service Company The Riverton Company, a Utah ski resort, recently announced a $602,448 expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $132,000 in equal annual cash flows for each of the first seven years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for seven years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent.fill in the blank 1 % b. What are some…
internal Rate of Return Method for a Service Company The Riverton Company, a ski resort, recently announced a $931,970 expansion to lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $214,000 in equal annual cash flows for each of the first six years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for six years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent.fill in the blank 1 % b. Identify the uncertainties…
Internal Rate of Return Method for a Service Company The Riverton Company, a ski resort, recently announced a $601,326 expansion to lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $198,000 in equal annual cash flows for each of the first four years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for four years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent.fill in the blank 1 %
Internal Rate of Return Method for a Service Company The Riverton Company, a ski resort, recently announced a $215,352 expansion to lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $72,000 in equal annual cash flows for each of the first five years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the expected internal rate of return of this project for five years, using the present value of an annuity of $1 table above. If required, round your final answer to the nearest whole percent.fill in the blank 1 % b. Indentify the uncertainties…
Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $48,592 and annual net cash flows of $16,000 for each of the four years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 3.465 4 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 4.917 4.355 6 4.111 3.784 3.326 4.160 7 5.582 4.868 4.564 3.605 8 6.210 5.335 4.968 4.487 3.837 5.759 6.802 5.328 4.772 4.031 6.145 10 7,360 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %
The Canyons Resort, a Utah ski resort, announced a $1,048,248 expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $211,000 in equal annual cash flows for each of the first eight years of the project life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above. In your calculation, round the net present value factor to three decimal places.

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