A firm is considering a project requiring an investment of $40,000.The project would generate an annual cash flow of $10,858 for the next six years.The company uses the straight-line method of depreciation.Which of the following is the approximate internal rate of return for the project? (Note: Round the discount factor to three decimal places.)

Question

Quizplus · Accepted Answer

Discount factor = Investment ÷ Annual Cash Flow = $40,000 / $10,858 = 3.684
A discount factor of 3.684 for six periods corresponds to a rate of 16%, which is the IRR.

A Firm Is Considering a Project Requiring an Investment of $40,000.The