(Ignore Income Taxes in This Problem) the Management of Favreau

Multiple Choice

(Ignore income taxes in this problem) The management of Favreau Corporation is considering the purchase of a machine that would cost $310,464 and would have a useful life of 5 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $84,000 per year. The internal rate of return on the investment in the new machine is closest to:

A) 12%
B) 14%
C) 11%
D) 13%