Glades Thread Company Is Evaluating an Investment That Will Cost

question 83

Multiple Choice

Glades Thread Company is evaluating an investment that will cost $720,000 and will yield cash flows of $230,000 in the first year,$370,000 in the second year,and $360,000 in the third and the final year.Use the table below and determine the internal rate of return. Present value of $1:
$$\begin{array} { | c | c | c | c | c | c | } \hline & 8 \% & 9 \% & 10 \% & 11 \% & 12 \% \\\hline 1 & 0.926 & 0.917 & 0.909 & 0.901 & 0.893 \\\hline 2 & 0.857 & 0.842 & 0.826 & 0.812 & 0.797 \\\hline 3 & 0.794 & 0.772 & 0.751 & 0.731 & 0.712 \\\hline 4 & 0.735 & 0.708 & 0.683 & 0.659 & 0.636 \\\hline 5 & 0.681 & 0.65 & 0.621 & 0.593 & 0.567 \\\hline\end{array}$$ The IRR of the project will be ________.

• A)between 11% and 12%
• B)less than 10%
• C)less than 11%,more than 10%
• D)more than 12%