What is the internal rate of return for project gray


Fehr Company is considering two capital investment proposals. Estimates regarding each project are provided below:


Project Blue Project Gray
Initial investment $400,000 $600,000
Annual net income 20,000 42,000
Net annual cash inflow 100,000 142,000
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

what is the internal rate of return for Project Gray ?

 

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