Freeley Co

Multiple Choice

Freeley Co. is considering an expansion project costing $390,000 up front. The expansion is expected to produce cash flows of $120,000 a year for two years. In Year 3, the project is expected to produce a cash flow of $225,000. The expected return on this expansion project is:

A) 7.12%
B) 8.16%
C) 8.33%
D) 8.51%
E) 8.47%