In Exhibit 7-14, a firm finds that it is experiencing numerous managerial and information problems. The position of its short- and long-run average total cost curves suggest that it is operating at a production level:

Laws corporation is considering the purchase of a machine costing $16,000. estimated cash savings from using the new machine are $4,120 per year. the machine will have no salvage value at the end of its useful life of six years and the required rate of return for laws corporation is 12%. the machine's internal rate of return is closest to (ignore income taxes) (a) 12% (b) 14% (c) 16% (d) 18%