15 The internal rate ofreturn is defined as the: O at which the net present value of a project is zero. b) rate of return a project will generate if the in financed solely with internal funds. project c) rate that equates the net cash inflows of project to zero. d) maximum rate of return a firm expects to earn on a project. a e) rate causes the profitability index for a project to equal zero. Use the following information for the next four questions: The Umbrella Corporation is considering expanding one of its production facilities to research a new type of virus, that will hopefully not result in another zombie outbreak. The project would require an $15,000,000 capital investment and will be depreciated (straight-line to zero) over its 3 year life. They know that they will be able to salvage $3,500,000 for the equipment at that time. Incremental sales are expected to be $12,750,000 annually for the 3 year period with costs (excluding depreciation) of 30% of sales. The company would also have to commit initial working capital to the project ofS4.325,000. The company has a 35% tax rate, and requires a 10% rate of retum for projects ofthis risk level. 16)Project cash flow (Cash Flow From Assets for Year o is: a) $16,000,000 b) -S16,000,000 c) -$17,000,000 -S17,300,000 e) -S21,000,000 Project cash flow (Cash Flow From Assets) for Year 1 is: a S5,800,600 c) $7,800,231 d) $6,800,470 e) 37,551,250 a) $10,000,000 b) $10,826,250 c) $12,800,555 d) $13,800,000 e) $9,340,844