(Ignore income taxes in this problem. )Duhl Long-Haul,Inc. ,is considering the purchase of a tractor-trailer that would cost $126,175,would have a useful life of 5 years,and would have no salvage value.The tractor-trailer would be used in the company's hauling business,resulting in additional net cash inflows of $35,000 per year.The internal rate of return on the investment in the tractor-trailer is closest to:

Question

Quizplus · Accepted Answer

Factor of the internal rate of return = Investment required F1F1F1S1F1F1F10 Annual net cash inflow
= $126,175 F1F1F1S1F1F1F10 $35,000 = 3.605
The factor of 3.605 for 5 years represents an internal rate of return of 12%.

(Ignore Income Taxes in This Problem