GuSont Inc. was considering an investment in the following project: 16 Required initial investment Net annual after-tax cash inflow Annual depreciation expense ($990,000 $165,000)/15 years $990,000 $165,000 55,000 Estimated salvage value Life of the project in years $165,000 15 The internal rate of return (IRR) is (Note: to solve this problem students will need access either to AppendixeTable2 (Chapter12) or to Excel): Multiple Choice 16 Somewhere between 10% and 12%. Greater than 15%. Somewhere between 12% and 14%. Somewhere between 14% and 15%. Less than 10%. TABLE 2 Present Value of Annuity ofs Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0835 0.877 0.870 0.833 0.800 0.769 2 1.886 1.859 1.833 1s0S 1.783 1759 1.736 1713 1690 1.668 1647 1.626 1.528 1440 1.361 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.106 1.952 1.316 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.589 2.362 2.166 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3433 3.352 2.991 2.689 2.436 5.242 5.076 4.917 4767 4.623 4486 4.355 4.231 4.111 3.993 3.889 3.784 3.326 2.951 2.643 6.002 5.786 5582 5.389 5.206 5033 4.86S 4.712 4.564 4.423 4.28S 4.160 3.605 3.161 2.802 S 6.733 6463 6.210 5.971 5.747 5,535 5.335 5.146 4.968 4.799 4.639 4487 3.837 3.329 2.925 7.435 7.108 6.302 6.515 6.247 5.995 5.759 5.537 5.328 5,132 4946 4.772 4031 3.463 3.019 10 S.111 7.722 7.360 7.024 6.710 6418 6.145 5.889 5.650 5426 5.216 5.019 4.192 3.571 3.092 11 8.760 S.306 7887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5,453 5.234 4.327 3.656 3.147 9.385 S.363 8.384 7.943 7.536 7.161 6.314 6.492 6194 5.918 5.660 5.421 4.439 3.725 3.190 9.986 9.394 8853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5583 4.533 3.780 3.223 14 10563 9.899 9.295 8.745 S.244 7.786 7.367 6932 6 628 6.302 6.002 5.724 4611 3.824 3.249 15 11.118 10.330 9.712 9.108 .559 8.061 7.606 7.191 6811 6462 6.142 5847 4.675 3.859 3.268 16 11652 10.838 10.106 9447 851 313 7.324 7.379 6.974 6.604 6.265 5.954 4.730 3.887 3.283 17 12166 11.274 10.477 9.763 9.122 8544 3.022 7.549 7.120 6.729 6.373 6.047 4.775 3910 3.295 18 12659 11690 10.828 10.059 9.372 756 8.201 7 702 7.250 6.340 6.467 6.128 4.812 3.928 3.304 19 13,134 12.085 11.158 10.336 9.604 950 8365 7.839 7 366 6 938 6 550 6 198 4343 3 942 3.311 13.590 12.462 11.470 10.594 9.813 9.129 8.514 7963 7 469 7 025 6623 6259 4.870 3 954 3316 22 14451 13.163 12.042 11061 10201 9.442 8.772 8176 7645 7.170 6.743 6 359 4909 3970 3323 15247 13.799 12.550 11.469 10529 9.707 3.935 8.348 7.784 7.283 6835 6434 4937 3981 3 327 25 15 622 14094 12783 11 654 10675 9823 9 077 422 7.843 7 330 6.873 6.464 4948 3985 3.329 30 17292 15 372 13,765 12.409 11.258 10274 9 427 8 694 8.055 7.496 7003 6.566 4979 399s 3332 35 18 665 16 374 14.498 12948 11655 10.567 9 644 8.85S 8.176 7586 7070 6617 4992 3998 3333 40 19.793 17.159 15 046 13 332 11.925 10 757 9.779 8.951 3244 7.634 7.105 6 642 4.997 3.999 3333