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%.