Final answer:
The correct answer is option c. To compute the IRR statistic for Project E, we use the formula for calculating NPV and solve for the discount rate that makes NPV equal to zero. The appropriate cost of capital is 8 percent. The IRR for Project E is 13.45%.
Step-by-step explanation:
To compute the IRR (Internal Rate of Return) statistic for Project E, we need to find the discount rate that makes the net present value (NPV) of the project equal to zero. The IRR is the discount rate that achieves this. The appropriate cost of capital is given as 8 percent. We can use the formula for calculating NPV to find the IRR:
NPV = Cash Flows / (1 + Discount Rate)^n
Where Cash Flows are the expected cash flows from the project, Discount Rate is the cost of capital, and n is the number of periods.
Once we have the NPV formula, we can solve for the IRR by setting NPV equal to zero and solving for the Discount Rate. In this case, the IRR statistic for Project E is 13.45% (c).