Use the following table $\text { Present Value of an Annuity of } 1$$\begin{array}{rrrr}
\text { Period } & 8 \% & 9 \% & 10 \%\
1 & .926 & .917 & .909 \
2 & 1.783 & 1.759 & 1.736 \
3 & 2.577 & 2.531 & 2.487
\end{array}$ A company has a minimum required rate of return of 8% and is considering investing in a project that costs $68337 and is expected to generate cash inflows of $27000 each year for three years. The approximate internal rate of return on this project is
A) 8%.
B) 9%.
C) 10%.
D) less than the required 8%.

Question

Use the following table $\text { Present Value of an Annuity of } 1$$\begin{array}{rrrr}
\text { Period } & 8 \% & 9 \% & 10 \%\
1 & .926 & .917 & .909 \
2 & 1.783 & 1.759 & 1.736 \
3 & 2.577 & 2.531 & 2.487
\end{array}$  A company has a minimum required rate of return of 8% and is considering investing in a project that costs $68337 and is expected to generate cash inflows of $27000 each year for three years. The approximate internal rate of return on this project is
A) 8%.
B) 9%.
C) 10%.
D) less than the required 8%.

Quizplus · Accepted Answer

The present value of the cash inflows at 9% is $27000 * 2.531 = $68337, which matches the cost of the project, indicating an IRR of approximately 9%.

Use the Following Table Present Value of an Annuity of 1\text { Present Value of an Annuity of } 1 Present Value of an Annuity of 1

Use the Following Table $\text { Present Value of an Annuity of } 1$