Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of limited...
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Dwight Donovan, the president of Donovan Enterprises, is considering investment opportunities. Because of limited resources, he will be able to invest in only of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $ and for Project B are $ The annual expected cash inflows are $ for Project A and $ for Project B Both investments are expected to provide cash flow benefits for the next years. Donovan Enterprises desired rate of return is percent. Your task as Senior Accountant is to use your knowledge of net present value and internal rate of return to identify the preferred method and best investment opportunity for the company and present your results to Dwight Donovan. Please provide me the IRR with detail formula calculations.
Dwight Donovan, the president of Donovan Enterprises, is considering investment opportunities. Because of limited resources, he will be able to invest in only of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $ and for Project B are $ The annual expected cash inflows are $ for Project A and $ for Project B Both investments are expected to provide cash flow benefits for the next years. Donovan Enterprises desired rate of return is percent. Your task as Senior Accountant is to use your knowledge of net present value and internal rate of return to identify the preferred method and best investment opportunity for the company and present your results to Dwight Donovan. Please provide me the IRR with detail formula calculations.
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