Overland Company Has Gathered the Following Data on a Proposed

question 39

Multiple Choice

Overland Company has gathered the following data on a proposed investment project:
$\begin{array}{|l|r|}\hline \text { Investment in Depreciable Equipment } & \$ 150,000 \\\hline \text { Annual Cash Flows } & \$ 40,000 \\\hline \text { Life of the Equipment } & 10 \text { years } \\\hline \text { Salvage Value } & -0 \\\hline\end{array}$
$$\begin{array} { | l | l |} \hline \text { Discourt Rate } & 10 \%\\\hline\end{array}$$
The internal rate of return on this investment is closest to which of the following? (Ignore income taxes in this problem.)

• A) 10%.
• B) Less than 10%.
• C) Between 10% and 20%.
• D) Greater than 20%.

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Definitions:

'>' Symbol

A mathematical symbol denoting that the value on the left is greater than the value on the right.

Alternative Hypothesis

The hypothesis that proposes a difference or effect, in contrast to the null hypothesis, which asserts no effect or relationship.

One-tailed

Refers to a type of statistical test where the hypothesis specifies a direction of the expected difference or relationship.

Standard Deviation

An indicator of how much the values in a dataset spread out or vary from one another.