Question #32

Somerville Corporation is considering investing in specialized equipment costing $693,000. The equipment has a useful life of 5 years and a residual value of $53,000. Depreciation is calculated using the straight - line method. The expected net cash inflows from the investment are: Year 1 $120,000 Year 2 $100,000 Year 3 $159,000 Year 4 $117,000 Year 5 $87,000 $583,000 Somerville Corporation's required rate of return is 14%. Is the internal rate of return of the investment equal to, higher than, or lower than 14%? O A. Equal to 14% B. lower than 14% O C. higher than 14% O D. Cannot be determined from the given data