Fehr Company is considering two capital investment proposals. Estimates regarding each project are provided below: The company requires a 10% rate of return on all new investments.
The internal rate of return for Project Gray is approximately
A) 10%.
B) 11%.
C) 12%.
D) 9%.

Question

Fehr Company is considering two capital investment proposals. Estimates regarding each project are provided below:  The company requires a 10% rate of return on all new investments. 
The internal rate of return for Project Gray is approximately
A) 10%. 
B) 11%. 
C) 12%. 
D) 9%.

Quizplus · Accepted Answer

Project Gray has an internal rate of return of approximately 11%, which is greater than the required rate of return of 10%. Project Beige has an internal rate of return of approximately 9.7%, which is lower than the required rate of return. Therefore, Project Gray is the best choice.

Fehr Company Is Considering Two Capital Investment Proposals