Valdez Company has a required rate of return of 12%. The Company has an investment opportunity to purchase an asset that costs $171,654.05. The asset is expected to have a 5 year useful life and is expected to produce cash inflows of $50,000 per year. Based on this information, Valdez should (Use the tables in the Chapter 10 appendix.)

purchase the asset because the internal rate of return is higher than the required rate of return.

not purchase the asset because the internal rate of return is lower than the required rate of return.

purchase the asset because the internal rate of return is equal than the required rate of return.

not purchase the asset because the internal rate of return is equal than the required rate of return.