2D2B FOSTER MANUFACTURING IS ANALYZING A CAPITAL INVESTMENT PROJECT T...
338.
CSO: 2D2b
LOS: 2D2b
Foster Manufacturing is analyzing a capital investment project that is forecasted to
produce the following cash flows and net income.
After Tax
Net
Year
Cash-Flows
Income
0
$(20,000)
$ 0
1
6,000
2,000
2
6,000
2,000
3
8,000
2,000
4
8,000
2,000
The internal rate of return (rounded to the nearest whole percentage) is
a.
5%.
b.
12%.
c.
14%.
d.
40%.