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Cardo Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project SoupProject Nuts
Initial investment$600,000$900,000
Annual net income30,00063,000
Net annual cash inflow150,000213,000
Estimated useful life5 years6 years
Salvage value-0--0-
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
Periods9%10%11%12%
53.8903.7913.6963.605
64.4864.3554.2314.111
The internal rate of return for Project Nuts is approximately?
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