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

question 96

Multiple Choice

Use the information below to answer the following question(s) .Neptune Ltd.wants to expand its operations by manufacturing a new product line.New equipment will cost $225,000.Incremental sales are estimated at $150,000 per year for 6 years.Variable costs of producing the new product line are 52% of sales and incremental annual fixed costs are $25,000.The equipment can be salvaged after 6 years for 16% of its original cost.The company's required rate of return for new projects is 18%.Ignore income taxes.
-What is the internal rate of return of the Neptune Ltd.investment?

• A)13.62%
• B)12.75%
• C)10.00%
• D)6.86%
• E)18.00%

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Definitions:

Measures

Quantitative or qualitative tools used to assess, evaluate, or quantify variables of interest in research, testing, and evaluation.

Description

A detailed account or explanation of an object, person, or event.

Observable

Something that can be seen or noticed by others, often used in the context of behaviors or phenomena that can be directly witnessed.

Variables

Elements or factors that can change and potentially affect the outcome of a study or experiment.