Assume that a company is considering buying a new piece of equipment for $240,000 that would have a useful life of five years and no salvage value. The equipment would generate the following estimated annual revenues and expenses:

Revenues $ 125,900 Less operating expenses: Commissions $ 15,000 Insurance 5,000 Depreciation 48,000 Maintenance 30,000 $ 98,000 Net operating income $ 27,900

The internal rate of return for this investment is closest to:

Multiple Choice

A. 20%.

B. 16%.

C. 22%.

D. 18%.