11L-5

Required information (The following information applies to the questions displayed below.) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated FCA'S cost of capital $ 280,000 $ 10 years 25,000 6,200 88 $ Assume straight line depreciation method is used. 5. Without doing any calculations, what is the project's IRR? Multiple Choice Greater than 8% Less than 3% Between 3% and 8%