Foster Manufacturing is analyzing a capital investment project that is forecasted to produce the following cash flows and net income Using the present value tables provided in Appendix A, the internal rate of return (rounded to the nearest whole percentage) is a 5 b 12 c 14 d 40 After Tax Net Incom...

c 14 Using trial and error an internal rate of return of 14 equates Fosters cash flows to th ...

Foster Manufacturing is analyzing a capital investment project that is forecasted to produce the following cash flows

Question:

Foster Manufacturing is analyzing a capital investment project that is forecasted to produce the following cash flows and net income:

After-Tax Net Income Cash Flows Year $(20,000) 6,000 2,000 2 6,000 2,000 2,000 8,000 2,000 8,000

Using the present value tables provided in Appendix A, the internal rate of return (rounded to the nearest whole percentage) is:

a. 5%.

b. 12%.

c. 14%.

d. 40%.

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...

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