Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):

Investment required in equipment$30,000Annual cash inflows$6,000per yearSalvage value of equipment$0Life of the investment15yearsRequired rate of return10%

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

Click here to viewExhibit 13B-1andExhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.

The internal rate of return of the investment is closest to:

Multiple Choice

• 16%
• 18%
• 20%
• 22%