Gustavo is considering an investment proposal that requires an initial investment of $91,100, has predicted cash inflows of $30,000 per year for four years, and no residual value.

The internal rate of return of the investment proposal is:

a. 12%

b. 14%

c. 10%

d. 8%

Seans Sandwich Shop purchased an asset for $100,000 that has no residual value and a 10-year life. Seans effective income tax rate is 30 percent, and Sean uses the straight-line depreciation method for income tax reporting purposes.

Seans annual tax savings from the depreciation tax shield is:

a. $10,000

b. $7,000

c. $3,333

d. $33,333

e. $3,000