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

question 124

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%

---

Definitions:

Meganational Strategy

A business strategy that emphasizes operating and competing in multiple countries as one global market.

Avoids Adaptation

a strategy where a business does not significantly alter its product or services to accommodate different cultural or market requirements in its expansion or operations.

Differentiated Needs

The varying requirements and preferences of customers or markets that businesses seek to satisfy with customized products or services.

Differentiation Strategy

A business approach where a company seeks to distinguish its products or services from competitors' offerings through unique features and benefits.