Question
THE METAPHOR COMPANY IS CONSIDERING A 5 YEAR PROJECT. IT PLANS TO INVEST $80,000 NOW AND IT FORECASTS CASH INFLOWS FOR EACH YEAR OF $22,857.
THE METAPHOR COMPANY IS CONSIDERING A 5 YEAR PROJECT. IT PLANS TO INVEST $80,000 NOW AND IT FORECASTS CASH INFLOWS FOR EACH YEAR OF $22,857. THE COMPANY REQUIRES A HURDLE RATE OF 12%. CALCULATE THE INTERNAL RATE OF RETURN TO DETERMINTE WHETHER IT SHOULD ACCEPT THIS PROJECT. SELECTED FACTORS FOR A PRESENT VALUE OF AN ANNUITY OF 1 FOR FIVE YEARS ARE BELOW:
INTEREST RATE------------------------------- PRESENT VALUE OF AN ANNUITY OF $1 FACTOR
10%---------------------------------------------------------------------------------- 3,7908
12%-------------------------------------------------------------------------------------3,6048
14%-------------------------------------------------------------------------------------3,4331
WHATS IS THE ITERNAL RATE OF RETURN AND SHOULD WE TAKE THIS PROJECT? EXPLAIN WHY
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