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Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 31,000 Annual cash inflows $
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):
Investment required in equipment | $ | 31,000 | |
Annual cash inflows | $ | 6,400 | |
Salvage value of equipment | $ | 0 | |
Life of the investment | 15 | years | |
Required rate of return | 10 | % | |
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 view Exhibit 13B-1 and Exhibit 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
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21%
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19%
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17%
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23%
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