You require an internal rate of return of 8% to accept a project. If the project will yield $10,000 per year for 10 years, what is the maximum amount that you would be willing to invest in the project?

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Quizplus · Accepted Answer

Appendix D PV_{IFA(10 periods, 8%}₎ = ($ Investment/$10,000) 6.710 = ($ Investment/$10,000) Maximum investment = $67,100 Note that Appendix D CAN be used in this case because the cash inflows remain the same during the payback period, thereby making this an "annuity."

You Require an Internal Rate of Return of 8% to Accept