Eddison Electronic Company (EEC) provides electricity for several states in the United States. You have
been employed as a cost accountant at this organization. You were asked to provide training to operational
managers in areas in which they are struggling, such as internal rate of return, simple rate of return, and net
present value. Please discuss the following:
How is the internal rate of return calculated?
Explain how it supports a capital business decision versus the NPV model.
Explain how simple rate of return has been used in a company you are familiar with related to capital
budgeting
Sample Solution
