(Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project:

	Investment in equipment..................................	$150,000
	Annual cash flows...........................................	$40,000
	Salvage value of equipment.............................	$0
	Life of the equipment.......................................	10 years
	Required rate of return....................................	10%

The company uses straight-line depreciation on all equipment.

Required:

(iv) Is this a viable project?

A.

No, because the IRR is too low

B.

Yes, because the ARR is more than the cost of capital

C.

No, because the IRR is less than the cost of capital

D.

Yes, because the ARR and IRR are more than the cost of capital