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Item 9

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Chao Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $420,342, would have a useful life of 7 years, and would have no salvage value. The tractor-trailer would be used in the company's hauling business, resulting in additional net cash inflows of $78,000 per year. The company uses straight-line depreciation on all tractor-trailers. Assume cash flows occur uniformly throughout a year except for the initial investment.The internal rate of return on the investment in the tractor-trailer is closest to (Ignore income taxes.):

oreen_5e_Rechecks_2019_10_16

Multiple Choice

• 9%

• 7%

• 6%

• 4%