Osterwitz Company Is Evaluating an Investment of $1,000,000 Which Will

question 113

Multiple Choice

Osterwitz Company is evaluating an investment of $1,000,000 which will yield cash flows of $142,400 per year for 10 years with no residual value. What is the internal rate of return? (Please choose the rate that is closest to the actual solution.)
$\begin{array}{|c|c|c|c|c|c|c|}\hline \text {Present Value of}\\ \text {an Annuity of }\\\$1\\\hline&5\%&6\%&7\%&8\%&9\%&10\%\\\hline1 & 0.952& 0.943 & 0.935 & 0.926 & 0.917 & 0.909 \\\hline 2& 1.859 & 1.833 & 1.808 & 1.783 & 1.759 & 1.736 \\\hline 3& 2.723 & 2.673 & 2.624 & 2.577 & 2.531 & 2 .487 \\\hline 4& 3.546 & 3.465 & 3.387 & 3.311 & 3.240 &3.170 \\\hline 5& 4.329 & 4.212 & 4.100 & 3.993 & 3.890 & 3 .791 \\\hline 6& 5.076 & 4.917 & 4.767 & 4.623 & 4.480 &4.355 \\\hline 7 & 5.786 & 5.582 & 5.389 & 5.206 & 5.033 &4.868 \\\hline 8 & 6.463 & 6.210 & 5.971 & 5.747 & 5.535 & 5 .759 \\\hline 9 & 7.108 & 6.802 & 6.515 & 6.247 & 5.995 & 5.759 \\\hline 10&7. 722 & 7.360 &7.024 & 6.710 & 6.418 & 6.145\\\hline\end{array}$

• A) 6%
• B) 7%
• C) 8%
• D) 9%

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Definitions:

Marketing Activities

Various actions or strategies undertaken by a company to promote its products or services and increase its market share.