Gladeer Company Is Evaluating an Investment That Will Cost $520,000

question 63

Multiple Choice

Gladeer Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Use the tables below and determine the internal rate of return.
Present value of $1:
$$\begin{array} { | c | c | r | r | r | } \hline & { 8 \% } & { 9 \% } & 10 \% & 11 \% \\\hline 1 & 0.926 & 0.917 & 0.909 & 0.901 \\\hline 2 & 0.857 & 0.842 & 0.826 & 0.812 \\\hline 3 & 0.794 & 0.772 & 0.751 & 0.731 \\\hline 4 & 0.735 & 0.708 & 0.683 & 0.659 \\\hline 5 & 0.681 & 0.65 & 0.621 & 0.593 \\\hline\end{array}$$ The IRR of the project will be:

• A) between 9% and 10%.
• B) less than 8%
• C) less than 9%, more than 8%
• D) more than 10%