Reference no: EM132719298

Whispering Winds, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will provide annual cost savings of $11676 and will be depreciated straight-line over its useful life with no salvage value. Whispering Winds requires a 10% rate of return.

Present Value of an Annuity of 1

Period             8%             9%            10%             11%             12%           15%

                 6 4.623           4.486         4.355          4.231           4.111       3.784

Problem 1: What is the approximate internal rate of return for this investment?

Option 1: 9%

Option 2: 10%

Option 3: 11%

Option 4: 12%