If a project costing $40000 has a profitability index of 1 and the discount rate was 14%, then the projects internal rate of return was

less than 14%.

greater than 14%.

undeterminable.

equal to 14%.

Present Value of an Annuity of 1Periods8%9%10%1.926.917.90921.7831.7591.73632.5772.5312.487

A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $69116 and is expected to generate cash inflows of $27000 each year for three years. The approximate internal rate of return on this project is

9%.

less than the required 8%.

7%.

8%.

Larkspur recently invested in a project with a 3-year life span. The net present value was $7400 and annual cash inflows were $21000 for year 1; $23000 for year 2; and $25000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was

	Present Value	PV of an Annuity
Year	of 1 at 15%	of 1 at 15%
1	0.870	0.870
2	0.756	1.626
3	0.658	2.283

$43534.

$38002.

$52630.

$44708.