A Project Manager Is Using the Internal Rate of Return

question 37

Multiple Choice

A project manager is using the internal rate of return method to make the final decision on which project to undertake.Which of these four projects has the highest internal rate of return?

• A)$100,000 initial outlay with $10,000 cash inflows during the first two years,$20,000 during the third and fourth years,and $30,000 during the fifth year
• B)$100,000 initial outlay with a $5,000 cash inflow during the first year,$15,000 cash inflow during the second year,and $25,000 cash inflows during years three through five
• C)$75,000 initial outlay with a $5,000 cash inflow during the first year,increasing by $5,000 per year through the fifth year
• D)$50,000 initial outlay with $5,000 cash inflows during the first two years,$15,000 during the third and fourth years,and $20,000 during the fifth year

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Definitions:

Collective Bargaining Agreements

Legal contracts between employers and labor unions that outline wages, hours, and working conditions for employees.

Labour Force

The total number of people employed or seeking employment in a given area or economy.

Expectancy Theory

A psychological theory about motivation predicting that an individual's motivational force is a result of expectancy, instrumentality, and valence.

High Instrumentality

The belief or expectation that high performance will lead to desirable outcomes.