Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

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Present-value factors for annuity of €1 for 10 years

13.19 Ranking
projects.
(40 min)
1
Project B Let F = Present-value factor for an annuity of €1 for 10 years in Appendix B, Table 4.
€100,000 = €20,000F
F
= 5.000 for year life The internal rate of return can be calculated by interpolation
Present-value factors for
annuity of €1 for 10 years
14% 5.216 5.216
IRR
–
5.000 16% 4.833
– Difference 0.383 0.216 0.216
IRR
14%
(2%) 15.1%
0.383


=
+
=





Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Project C
€200,000 = €70,000F Let F = Present-value factor for an annuity of €1 for 5 years in Appendix B, Table 4.
F
= 2.857 for year life The internal rate of return can be calculated by interpolation

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