Gregory Cable Company is considering investing $450,000 in telecommunications equipment that has an estimated life of five years with no residual value.The cash flows are as shown below:
$$\begin{array} { | r | r | }
\hline \text { Year 1 } & \$ 120,000 \
\hline 2 & 235,000 \
\hline 3 & 140,000 \
\hline 4 & \$ 98,000 \
\hline
\end{array}$$ Present value of an ordinary annuity of $1:
$$\begin{array} { | c | c | c | c | c | }
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 1.69 & 1.668 & 1.647 & 1.626 \
\hline 3 & 2.402 & 2.361 & 2.322 & 2.283 \
\hline 4 & 3.037 & 2.974 & 2.914 & 2.855 \
\hline 5 & 3.605 & 3.517 & 3.433 & 3.352 \
\hline
\end{array}$$ Present value of $1:
$$\begin{array} { | c | c | c | c | c | }
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 0.797 & 0.783 & 0.769 & 0.756 \
\hline 3 & 0.712 & 0.693 & 0.675 & 0.658 \
\hline 4 & 0.636 & 0.613 & 0.592 & 0.572 \
\hline 5 & 0.567 & 0.543 & 0.519 & 0.497 \
\hline
\end{array}$$ $$\text { Calculate the IRR of the project. Show your computations. }$$

Question

Gregory Cable Company is considering investing $450,000 in telecommunications equipment that has an estimated life of five years with no residual value.The cash flows are as shown below:
 $$\begin{array} { | r | r | } 
\hline \text { Year 1 } & \$ 120,000 \
\hline 2 & 235,000 \
\hline 3 & 140,000 \
\hline 4 & \$ 98,000 \
\hline
\end{array}$$ Present value of an ordinary annuity of $1:
 $$\begin{array} { | c | c | c | c | c | } 
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 1.69 & 1.668 & 1.647 & 1.626 \
\hline 3 & 2.402 & 2.361 & 2.322 & 2.283 \
\hline 4 & 3.037 & 2.974 & 2.914 & 2.855 \
\hline 5 & 3.605 & 3.517 & 3.433 & 3.352 \
\hline
\end{array}$$ Present value of $1:
 $$\begin{array} { | c | c | c | c | c | } 
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 0.797 & 0.783 & 0.769 & 0.756 \
\hline 3 & 0.712 & 0.693 & 0.675 & 0.658 \
\hline 4 & 0.636 & 0.613 & 0.592 & 0.572 \
\hline 5 & 0.567 & 0.543 & 0.519 & 0.497 \
\hline
\end{array}$$ $$\text { Calculate the IRR of the project. Show your computations. }$$

Quizplus · Accepted Answer

The Answer of Gregory Cable Company is considering investing $450,000 in telecommunications equipment that has an estimated life of five years with no residual value.The cash flows are as shown below:
 $$\begin{array} { | r | r | } 
\hline \text { Year 1 } & \$ 120,000 \
\hline 2 & 235,000 \
\hline 3 & 140,000 \
\hline 4 & \$ 98,000 \
\hline
\end{array}$$ Present value of an ordinary annuity of $1:
 $$\begin{array} { | c | c | c | c | c | } 
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 1.69 & 1.668 & 1.647 & 1.626 \
\hline 3 & 2.402 & 2.361 & 2.322 & 2.283 \
\hline 4 & 3.037 & 2.974 & 2.914 & 2.855 \
\hline 5 & 3.605 & 3.517 & 3.433 & 3.352 \
\hline
\end{array}$$ Present value of $1:
 $$\begin{array} { | c | c | c | c | c | } 
\hline & 12 \% & 13 \% & 14 \% & 15 \% \
\hline 1 & 0.893 & 0.885 & 0.877 & 0.87 \
\hline 2 & 0.797 & 0.783 & 0.769 & 0.756 \
\hline 3 & 0.712 & 0.693 & 0.675 & 0.658 \
\hline 4 & 0.636 & 0.613 & 0.592 & 0.572 \
\hline 5 & 0.567 & 0.543 & 0.519 & 0.497 \
\hline
\end{array}$$ $$\text { Calculate the IRR of the project. Show your computations. }$$

Gregory Cable Company Is Considering Investing $450,000 in Telecommunications Equipment