Figure 14-9. Kenner Company Is Considering Two Projects

question 36

Multiple Choice

Figure 14-9. Kenner Company is considering two projects.
Present value of an Annuity of $1 in Arrears
Refer to Figure 14-9.Which of the two projects,A or B,is better in terms of internal rate of return?

• A)Project A with an IRR of 12%
• B)Project B with an IRR of 14%
• C)Project A with an IRR of 10%
• D)Project B with an IRR of 10%
• E)Both projects have the same IRR

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Definitions:

Costs

The monetary value that a company incurs to produce goods or services, which may include expenses related to labor, materials, and overhead.

CCA Class

Stands for Capital Cost Allowance Class, a categorization in Canadian tax law used to determine the depreciation rate for tax purposes on tangible capital assets.

Book Value

The net value of a company's assets, minus its liabilities and intangible assets, as recorded on the balance sheet.

Depreciated

Describes the reduction in value of an asset over time, often due to wear and tear or obsolescence.