Boleyn Company
Boleyn Company Is Considering Two Projects Present Value of an Annuity of $1 in Arrears

question 110

Multiple Choice

Boleyn Company
Boleyn Company is considering two projects. $$\begin{array} { l r r } &\text { Project } A & \text { Project B } \\\text { Initial investment } & \$ 100,000 & \$ 25,000 \\\text { Annual cash flows } & \$ 18,750 & \$ 8,580 \\\text { Life of the project } & 8 \text { years } & 4 \text { years } \\\text { Depreciation per year } & \$ 25,000 & \$ 6,250\end{array}$$ Present value of an annuity of $1 in arrears $$\begin{array} { l l l l l } \text { Periads } & 8 \% & 10 \% & 12 \% & 14 \% \\1 & 0.926 & 0.909 & 0.893 & 0.877 \\2 & 1.783 & 1.736 & 1.690 & 1.647 \\3 & 2.577 & 2.487 & 2.402 & 2.322 \\4 & 3.312 & 3.170 & 3.037 & 2.914 \\5 & 3.993 & 3.791 & 3.605 & 4.433 \\6 & 4.623 & 4.355 & 4.111 & 3.889 \\7 & 5.206 & 4.868 & 4.564 & 4.288 \\8 & 5.747 & 5.335 & 4.968 & 4.639 \\9 & 6.247 & 5.759 & 5.328 & 4.946 \\10 & 6.710 & 6.145 & 5.650 & 5.216\end{array}$$
-Refer to Boleyn Company. Which of the two projects, A or B, has a higher internal rate of return?

• A) Project A with an IRR of 10%
• B) Project B with an IRR of 10%
• C) Project A with an IRR of 14%
• D) Project B with an IRR of 14%

---

Definitions:

Achievement Tests

Standardized tests designed to evaluate the knowledge or proficiency of an individual in specific areas or subjects.

Performance Tests

Evaluations designed to measure the effectiveness, quality, or reliability of a product, process, or employee.

Education Tests

Evaluations designed to measure learning, proficiency, or the achievement level of individuals within an educational setting.

Programmed Learning

An educational technique that involves breaking down learning content into manageable units, allowing for self-paced progression.