1) 2)

The internal rate of return factor is equal to the O capital investment divided by the net cash flows. capital investment divided by the present value of the net cash flows. O present value of net cash flows divided by the capital investment. O present value of net cash flows divided by the profitability index. Cheyenne is contemplating a capital project costing $40553. The project will provide annual cost savings of $15400 for 3 years and have a salvage value of $3000. The company's required rate of return is 10%. The company uses straight-line depreciation. Year Present Value PV of an Annuity of 1 at 10% of 1 at 10% .909 .909 .826 1.736 .751 2.487 2 3 This project is O unacceptable because it earns a rate less than 10%. acceptable because it has zero NPV. unacceptable because it has a negative NPV. O acceptable because it has a positive NPV