The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: 1 Project Number 2 3 $ (450,000) $ (360,000) 4 $(270,000) $ (480,000) Investment required Present value of cash inflows at a 10% discount rate Net present value Life of the project Internal rate of return $ 336,140 66,140 6 years 18% 522,970 $ 72,970 3 years 19% 433,400 $ 73,400 12 years 14% 567,270 $ 87,270 6 years 16% Because the company's required rate of return is 10%, a 10% discount rate has been used in the present value computations above.
