Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows.

Project Investment Annual Income LIfe of Project

22A $240,000 $15,000 6 years

23A 270,000 24,400 9 years

24A 280,000 21,000 7 years

Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Summer Company uses the straight-line method of depreciation.

Instructions

(a) Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals.

(b) If Summer Company's required rate of return is 11%, which projects are acceptable?

Optional Information:
Level: 2; Subject: Computer Information Systems

Already Tried:
Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows.

PROJECT    INVESTMENT    ANNUAL INCOME LIFE OF PROJECT   
22A      $240,000        $15,000        6 years
23A       270,000          24,400        9 years
24A       280,000          21,000        7 years

Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Summer Company uses the straight-line method of depreciation.

INSTRUCTIONS
(a) Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals.

(b) If Summer Company's required rate of return is 11%, which projects are acceptable?