Use the Following Information for Questions 112-115 $\text { The company requires a } 10 \% \text { rate of return on all new investments. }$

question 96

Multiple Choice

Use the following information for questions 112-115.
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below: $\begin{array}{lrr}&\text { Project Soup }&\text { Project Nuts }\\ \text { Initial investment } & \$ 400,000 & \$ 600,000 \\\text { Annual net income } & 30,000 & 46,000 \\\text { Net annual cash inflow } & 110,000 & 146,000 \\\text { Estimated useful life } & 5 \text { years } & 6 \text { years } \\\text { Salvage value } & -0- & -0-\end{array}$

$\text { The company requires a } 10 \% \text { rate of return on all new investments. }$

$\text { Present Value of an Annuity of } 1$
$\begin{array}{lllll}\text { Periods } & 9 \% & 10 \% & 11 \%& 12 \%\\5 & 3.890 & 3.791 & 3.696 & 3.605 \\6 & 4.486 & 4.355 & 4.231 & 4.111\end{array}$
-The internal rate of return for Project Nuts is approximately

• A) 11%.
• B) 12%.
• C) 10%.
• D) 9%.

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Definitions:

Pollyanna Principle

The tendency for people to remember pleasant items more accurately than unpleasant ones, reflecting an optimism bias in human memory.

Pleasant Events

Activities or experiences that are enjoyable and contribute to an individual's well-being and happiness.

Characteristics

Distinctive traits or qualities that define a person, object, or concept.

Perceiver

An individual or entity that observes, receives, and interprets information or stimuli.