Given the Following Information and Assuming Straight-Line Depreciation to Zero

question 214

Multiple Choice

Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year;
Salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.

• A) 6.25%
• B) 7.51%
• C) 8.15%
• D) 9.43%
• E) 10.24%

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