TB MC Qu. 08-101 (Ignore income taxes in this problem.) Overland Corporation...

(Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project:

Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables.

Investment required in equipment $ 570,000 Annual cash inflows $ 84,000 Salvage value of equipment $ 0 Life of the investment 20 years Discount rate 10 %

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The internal rate of return on the investment is closest to:

10%

12%

14%

16%