Paulsen Corporation is involved in the evaluation of a new computer-integrated manufacturing system. The system has a projected initial cost of P1,000,000. It has an expected life of six years, with no salvage value, and is expected to generate annual cost savings of P250,000. Based on Paulsen Corporation’s analysis, the project has a net present value of P57,625. Its profitability index is 1.06. Refer to Paulsen Corporation above, what is the project’s internal rate of return? a. between 12.5 and 13 percent b. between 11 and 11.5 percent c. between 11.5 and 12 percent d. between 13 and 13.5 percent
Paulsen Corporation is involved in the evaluation of a new computer-integrated manufacturing system. The system has a projected initial cost of P1,000,000. It has an expected life of six years, with no salvage value, and is expected to generate annual cost savings of P250,000. Based on Paulsen Corporation’s analysis, the project has a net present value of P57,625. Its profitability index is 1.06. Refer to Paulsen Corporation above, what is the project’s internal rate of return? a. between 12.5 and 13 percent b. between 11 and 11.5 percent c. between 11.5 and 12 percent d. between 13 and 13.5 percent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Paulsen Corporation is involved in the evaluation of a new computer-integrated manufacturing
system. The system has a projected initial cost of P1,000,000. It has an expected life of six years, with no salvage value, and is expected to generate annual cost savings of P250,000. Based on Paulsen
Corporation’s analysis, the project has a net present value of P57,625. Its profitability index is 1.06.
Refer to Paulsen Corporation above, what is the project’s internal rate of return ?
a. between 12.5 and 13 percent
b. between 11 and 11.5 percent
c. between 11.5 and 12 percent
d. between 13 and 13.5 percent
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