Oak Enterprises accepts projects earning more than the firm's

14%

cost of capital. Oak is currently considering a

10-year

project that provides annual cash inflows of

$20,000

and requires an initial investment of

$135,700.

a.Determine the IRR of this

project.

Is it acceptable?

b.Assuming that the cash inflows continue to be

$20,000

per year, how many additional years would the flows have to continue to make the project acceptable (that is, to make it have an IRR of

14%)?

c.With the given life, an initial investment of

$135,700,

and cost of capital of

14%,

what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for Oak's shareholders?