Use the Information Below to Answer the Following Question(s)

question 92

Multiple Choice

Use the information below to answer the following question(s) .Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-Brown Corporation recently purchased a new machine for $339,013.20.The new equipment has a useful life of 10 years.Net cash flows will be $60,000 per year, end of year payments.What is the internal rate of return?

• A)10 percent
• B)12 percent
• C)14 percent
• D)16 percent
• E)18 percent

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Definitions:

Accumulated Depreciation

The total amount of a company's assets' depreciation since the assets were acquired, reflecting how much of the assets' value has been used up over time.

Drawing Account

An account used to record withdrawals of cash or other assets from a business by the owner for personal use.

Final Entries

Journal entries made at the end of an accounting period to prepare accounts for the next period or close the books.

Journalizing

The process of recording a transaction in the journal.