GuSont Inc. was considering an investment in the following project:$\begin{array}{lrr}
\text { Required initial investment } & \$ 990,000 \
\text { Net annual after-tax cash inflow } & \$ 165,000 \
\text { Annual depreciation expense }(\$ 990,000-\$ 165,000) / 15 \text { years } & \$ 55,000 \
\text { Estimated salvage value } & \$ 165,000 \
\text { Life of the project in years } & 15
\end{array}$The internal rate of return (IRR) is (Note: to solve this problem students will need access either to Appendix C, Table 2 (Chapter 12) or to Excel):
A) Less than 10%.
B) Somewhere between 10% and 12%.
C) Somewhere between 12% and 14%.
D) Somewhere between 14% and 15%.
E) Greater than 15%.

Question

GuSont Inc. was considering an investment in the following project:$\begin{array}{lrr}
\text { Required initial investment } & \$ 990,000 \
\text { Net annual after-tax cash inflow } & \$  165,000 \
\text { Annual depreciation expense }(\$ 990,000-\$ 165,000) / 15 \text { years } & \$  55,000 \
\text { Estimated salvage value } & \$  165,000 \
\text { Life of the project in years } &  15
\end{array}$The internal rate of return (IRR) is (Note: to solve this problem students will need access either to Appendix C, Table 2 (Chapter 12) or to Excel): 
A) Less than 10%.
B) Somewhere between 10% and 12%.
C) Somewhere between 12% and 14%.
D) Somewhere between 14% and 15%.
E) Greater than 15%.

Quizplus · Accepted Answer

The Answer of GuSont Inc. was considering an investment in the following project:$\begin{array}{lrr}
\text { Required initial investment } & \$ 990,000 \
\text { Net annual after-tax cash inflow } & \$  165,000 \
\text { Annual depreciation expense }(\$ 990,000-\$ 165,000) / 15 \text { years } & \$  55,000 \
\text { Estimated salvage value } & \$  165,000 \
\text { Life of the project in years } &  15
\end{array}$The internal rate of return (IRR) is (Note: to solve this problem students will need access either to Appendix C, Table 2 (Chapter 12) or to Excel): 
A) Less than 10%.
B) Somewhere between 10% and 12%.
C) Somewhere between 12% and 14%.
D) Somewhere between 14% and 15%.
E) Greater than 15%.

GuSont Inc The Internal Rate of Return (IRR) Is (Note: to Solve