Question
14. (Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project: Click here to view Exhibit 8B-1
14.
(Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project:
Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables.
| Investment required in equipment | $ | 580,000 | |
| Annual cash inflows | $ | 74,000 | |
| Salvage value of equipment | $ | 0 | |
| Life of the investment | 20 | years | |
| Discount rate | 11 | % | |
|
| |||
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
The internal rate of return on the investment is closest to:
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Auditing Principles And Practice
Authors: Kumar And Sharma
3rd Edition
8120350987, 9788120350984
