nsidering an investment in equipment that would cost $50,000 and provide annual cash inflows of $14,000. The company's required rate of return is 12%; the internal rate of return for the investment is 10.5%. Should the company make this investment? a) Yes, since the internal rate of return is less than the company's required rate of return. b) No, since the internal rate of return is less than the company's required rate of return. c) The answer cannot be determined. d) Yes, since the internal rate of return is more than the company's required rate of return.
nsidering an investment in equipment that would cost $50,000 and provide annual cash inflows of $14,000. The company's required rate of return is 12%; the internal rate of return for the investment is 10.5%. Should the company make this investment? a) Yes, since the internal rate of return is less than the company's required rate of return. b) No, since the internal rate of return is less than the company's required rate of return. c) The answer cannot be determined. d) Yes, since the internal rate of return is more than the company's required rate of return.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Bern Corporation is considering an investment in equipment that would cost
$50,000 and provide annual cash inflows of $14,000. The company's required rate of
return is 12%; the internal rate of return for the investment is 10.5%. Should the
company make this investment?
a) Yes, since the internal rate of return is less than the company's required rate
of return.
b) No, since the internal rate of return is less than the company's required rate
of return.
c) The answer cannot be determined.
d) Yes, since the internal rate of return is more than the company's required
rate of return.
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