GuSont Inc. was considering an investment in the following project:

Required initial investment	$	990,000
Net annual after-tax cash inflow	$	165,000
Annual depreciation expense ($990,000 $165,000)/15 years	$	55,000
Estimated salvage value	$	165,000
Life of the project in years		15

The internal rate of return (IRR) is (Note: to solve this problem students will need access either to Appendix C, Table 2 (Chapter 12) or to Excel):

Multiple Choice

Somewhere between 12% and 14%.

Greater than 15%.

Somewhere between 10% and 12%.

Less than 10%.

Somewhere between 14% and 15%.