Linda's Graphic Designs Is Considering the Purchase of a Used

Multiple Choice

Linda's Graphic Designs is considering the purchase of a used color Laser Printer costing $38,400. The Printer would generate an annual cash flow of $16,000 for three years. At the end of three years, the Printer would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation with no mid-year convention. What is the internal rate of return to the nearest percent for the Printer, assuming no taxes are paid?

A) 8%
B) 10%
C) 12%
D) 42%