Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows.

Project

Investment

Annual Income

Life of Project

22A

240,000

15,000

6 years

23A

270,000

24,400

9 years

24A

280,000

21,000

7 years

Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Summer Company uses the straight-line method of depreciation.

Instructions

(a) Determine the internal rate of return for each project. Round the internal rate of return factor to three decimals.

(b) If Summer Company’s required rate of return is 11%, which projects are acceptable?