Bellamy Company Is Considering the Purchase of a Computerized Manufacturing

Multiple Choice

Bellamy Company is considering the purchase of a computerized manufacturing system. The after-tax cash benefits/savings associated with the system are as follows: $$\begin{array} { l r } \text { Decreased waste } & \$ 300,000 \\\text { Increased quality } & 400,000 \\\text { Decrease in operating costs } & 600,000 \\\text { Increase in on-time deliveries } & 200,000\end{array}$$ The system will cost $9,000,000 and will last ten years. The company's cost of capital is 12 percent. Which of the following best describes the IRR for this project?

A) between 14 and 16%
B) between 12 and 14%
C) between 10 and 12%
D) between 8 and 10%