A Machine Costs $25,000; It Is Expected to Generate Annual

question 67

Multiple Choice

A machine costs $25,000; it is expected to generate annual cash revenues of $8,000 and annual cash expenses of $2,000 for five years. The required rate of return is 12%. Using the tables that follow, which of the following statements about the machine's internal rate of return is true?

• A) The internal rate of return is greater than 12%.
• B) The internal rate of return is between 10% and 12%.
• C) The internal rate of return is less than 10%.
• D) The internal rate of return must be greater than 15%.
• E) There is insufficient information to make any judgment about the internal rate of return.