Southwest Airlines will only invest in equipment that has an internal rate of return of 15%. Should the airline buy equipment costing $800,000 if it projects the expenditure will generate the cash inflows of $235,000 per year for 5 years (assumed received at the end of the year).

Question 8 options:

No as IRR is 13.55%

None of these answers

Yes as IRR is 16.34%

No as IRR is 14.35%

Yes as IRR is 15.75%