Muse Corporation has gathered the following data on a proposed investment project:

Investment required in new equipment	$ 131,000
Annual cash inflows	$ 36,300
Salvage value of new equipment	$ 6,000
Life of the investment	5 years
Annual depreciation	$ 25,000

Using the factors below, the internal rate of return on Muses investment is closest to:

Periods	12%	14%	16%	18%
1	0.893	0.877	0.862	0.847
2	1.690	1.647	1.605	1.566
3	2.402	2.322	2.246	2.174
4	3.037	2.914	2.798	2.690
5	3.605	3.433	3.274	3.127

Multiple Choice

• 16%

• 14%

• 12%

• 18%