A machine costs $43,000; it is expected to generate annual cash revenues of $14,000 and annual cash expenses of $2,000 for five years. The required rate of return is 18%. Using the tables that follow, which of the following statements about the machine's internal rate of return is true?

Multiple Choice

The internal rate of return is greater than 18%.

The internal rate of return is between 15% and 18%.

The internal rate of return is less than 15%.

The internal rate of return must be greater than 21%.

There is insufficient information to make any judgment about the internal rate of return.

\begin{tabular}{ccccccccccc} & \multicolumn{8}{c}{ Future Value of $1} \\ Periods & 4% & 6% & 8% & 10% & 1268 & 14% & 16% & 1888 & 20% \\ 1 & 1.040 & 1.060 & 1.080 & 1.100 & 1.120 & 1.140 & 1.160 & 1.180 & 1.200 \\ 2 & 1.082 & 1.124 & 1.166 & 1.210 & 1.254 & 1.300 & 1.346 & 1.393 & 1.440 \\ 3 & 1.125 & 1.191 & 1.260 & 1.331 & 1.405 & 1.482 & 1.561 & 1.643 & 1.728 \\ 4 & 1.170 & 1.263 & 1.361 & 1.464 & 1.574 & 1.689 & 1.811 & 1.939 & 2.074 \\ 5 & 1.217 & 1.338 & 1.469 & 1.611 & 1.762 & 1.925 & 2.101 & 2.288 & 2.488 \\ 6 & 1.265 & 1.419 & 1.587 & 1.772 & 1.974 & 2.195 & 2.437 & 2.700 & 2.986 \\ 7 & 1.316 & 1.504 & 1.714 & 1.949 & 2.211 & 2.502 & 2.827 & 3.186 & 3.583 \\ 8 & 1.369 & 1.594 & 1.851 & 2.144 & 2.476 & 2.853 & 3.279 & 3.759 & 4.300 \\ 9 & 1.423 & 1.690 & 1.999 & 2.359 & 2.773 & 3.252 & 3.803 & 4.436 & 5.160 \\ 10 & 1.480 & 1.791 & 2.159 & 2.594 & 3.106 & 3.707 & 4.412 & 5.234 & 6.192 \end{tabular} \begin{tabular}{ccccccccccc} & \multicolumn{8}{c}{ Future Value of a Series of } & \multicolumn{1}{c}{ \$ Cash Flows } \\ Periods & \multicolumn{1}{c}{4%} & 6% & 8% & 10% & 12% & 14% & 16% & 18% & 20% \\ 1 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 \\ 2 & 2.040 & 2.060 & 2.080 & 2.100 & 2.120 & 2.140 & 2.160 & 2.180 & 2.220 \\ 3 & 3.122 & 3.184 & 3.246 & 3.310 & 3.374 & 3.440 & 3.506 & 3.572 & 3.640 \\ 4 & 4.247 & 4.375 & 4.506 & 4.641 & 4.779 & 4.921 & 5.067 & 5.215 & 5.368 \\ 5 & 5.416 & 5.637 & 5.867 & 6.105 & 6.353 & 6.610 & 6.877 & 7.154 & 7.442 \\ 6 & 6.633 & 6.975 & 7.336 & 7.716 & 8.115 & 8.536 & 8.977 & 9.442 & 9.930 \\ 7 & 7.898 & 8.394 & 8.923 & 9.487 & 10.089 & 10.730 & 11.414 & 12.142 & 12.916 \\ 8 & 9.214 & 9.898 & 10.637 & 11.436 & 12.300 & 13.233 & 14.240 & 15.327 & 16.499 \\ 9 & 10.583 & 11.491 & 12.488 & 13.580 & 14.776 & 16.085 & 17.519 & 19.086 & 20.799 \\ 10 & 12.006 & 13.181 & 14.487 & 15.938 & 17.549 & 19.337 & 21.321 & 23.521 & 25.959 \end{tabular} \begin{tabular}{ccccccccccc} & \multicolumn{8}{c}{ Present Value of $1} \\ Periods & 48 & 68 & 88 & 108 & 128 & 148 & 168 & 188 & 208 \\ 1 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 & 0.862 & 0.847 & 0.833 \\ 2 & 0.925 & 0.890 & 0.857 & 0.826 & 0.797 & 0.769 & 0.743 & 0.718 & 0.694 \\ 3 & 0.889 & 0.840 & 0.794 & 0.751 & 0.712 & 0.675 & 0.641 & 0.609 & 0.579 \\ 4 & 0.855 & 0.792 & 0.735 & 0.683 & 0.636 & 0.592 & 0.552 & 0.516 & 0.482 \\ 5 & 0.822 & 0.747 & 0.681 & 0.621 & 0.567 & 0.519 & 0.476 & 0.437 & 0.402 \\ 6 & 0.790 & 0.705 & 0.630 & 0.564 & 0.507 & 0.456 & 0.410 & 0.370 & 0.335 \\ 7 & 0.760 & 0.665 & 0.583 & 0.513 & 0.452 & 0.400 & 0.354 & 0.314 & 0.279 \\ 8 & 0.731 & 0.627 & 0.540 & 0.467 & 0.404 & 0.351 & 0.305 & 0.266 & 0.233 \\ 9 & 0.703 & 0.592 & 0.500 & 0.424 & 0.361 & 0.308 & 0.263 & 0.225 & 0.194 \\ 10 & 0.676 & 0.558 & 0.463 & 0.386 & 0.322 & 0.270 & 0.227 & 0.191 & 0.162 \end{tabular}