The Carnation Chemical Company Is Investing in an Incinerator to Dispose

Multiple Choice

The Carnation Chemical Company is investing in an incinerator to dispose of PCB waste. The incinerator costs $1.5 million and will generate end of year cash of $1 million for the next 3 years. At the end of 3 years the incinerator will be worthless and must be disposed of at the cost of $500,000. The internal rate of return for this project is:

A) between 10% and 20%.
B) between 20% and 30%.
C) between 30% and 40%.
D) more than 40%.