JP Company Is Considering Two Capital Investment Proposals The Company Requires an 11% Rate of Return on All

Multiple Choice

JP Company is considering two capital investment proposals. Estimates regarding each project are provided below: $\begin{array}{lr}&\text { Project Echo}&\text { Project Charlie }\\\text { Initial investment } & \$ 400,000&\$600,000 \\\text { Annual net income } & 20,000 &42,000\\\text { Net annual cash inflow } & 100,000&142,000 \\\text { Estimated useful life } & 5 \text { years } &6 \text { years } \\\text { Salvage value } & 0&0\end{array}$ The company requires an 11% rate of return on all new investments. $\begin{array}{lllll}\text { Periods } & 9 \%&10 \% &11 \% &12 \%\\\hline5 & 3.890 & 3.791 & 3.696 & 3.605 \\6 & 4.486 & 4.355 & 4.231 & 4.111\end{array}$
- The annual rate of return for Project Echo is

A) 5%.
B) 10%.
C) 25%.
D) 50%.