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:

Entire Burden

The total impact or effect of something, often related to the full cost or responsibility borne by an entity.

After-Tax Equilibrium

The balance or condition of a market after the effects of taxes have been considered, reflecting the impact on prices and quantities of goods and services.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good supplied.

Effective Price

The final price after accounting for rebates, discounts, or other financial adjustments.