Question text

A company is considering a 5-year project. It plans to invest $60,000 now and it forecasts net cash flows for each year of $16,000. The company requires a hurdle rate of 12%. Selected factors for the present value of an annuity of $1 for 5 years are shown below:

Interest Rate Present Value of an Annuity of $1 for 5 Years

10%..................................................................3.7908

12%...................................................................3.6048

14%..................................................................3.3522

The internal rate of return (IRR) is:

Select one or more:

a.

Lower than 10%.

b.

Slightly higher than 10%.

c.

Slightly lower than 12%.

d.

Slightly higher than 12%.

e.

Higher than 14%.