Refer to Exhibit 10?3. Is the return on this investment proposal exactly 20%, slightly more than 20%, or slightly less than 20%? Explain your answer.

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EXHIBIT 10–3 NPV Analysis of a Proposed Project Initial cost $5,000 Life of the project (years) Annual cost savings $1,800 -0- Salvage value 20% Required rate of return Amount of Cash Present Value of Item Year(s) Flow 20% Factor Cash Flows $ 1,800 1-5 2.991* $5,384 Annual cost savings Initial investment Now (5,000) 1.000 (5,000) $ 384 Net present value *From Exhibit 10-2 above If the Net Present Value Is Then the Project Is Acceptable, since it promises a return greater than the required rate of return Acceptable, since it promises a return equal to the required rate of return Positive Zero Not acceptable, since it promises a return less than the required rate of return Negative