A special machine can save $11,200 per year in cash operating expenses for the next 10 years. The cost is $44,000. No salvage value is expected. Assume the tax rate averages 2/7 of taxable income, straight-line depreciation is used, and the cost of capital = 10% . The CFAT is (round to the nearest dollar):

a.

$11,200

c.

$8,480

b.

$9,258

d.

$6,800

21. Refer to the preceding question. The internal rate of return, using linear interpolation and rounding to two decimal places, is:

a.

25.45%

c.

12.34%

b.

21.04%

d.

14.14%