Wally’s Plumbing provides commercial plumbing services to large factories. The company is looking at purchasing some new equipment that will have a useful life of 4 years. Information on the investment is as follows:
|
Initial investment: |
|
|
Asset |
$90,000 |
|
Changes in annual cash flows |
|
|
Cash receipts |
$60,000 |
|
Cash expenditures |
$35,000 |
|
Salvage value equipment at end of 4 years |
$10,000 |
In what range is the internal rate of return?
- 8% and 9%
- 9% and 10%
- 7% and 8%
- 10% and 11%