Iron,Inc ,Which Has a Hurdle Rate of 10%,is Considering Three

question 73

Multiple Choice

Iron,Inc. ,which has a hurdle rate of 10%,is considering three different independent investment opportunities.Each project has a five-year life.The annual cash flows and initial investment for each of the projects are as follows: (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. ) (Use appropriate factor from the PV tables.Do not round intermediate calculations.Round your final answer to the nearest hundred. ) In what order should Iron prioritize investment in the projects?

• A)A,C,B
• B)B,C,A
• C)A,B,C
• D)B,A,C

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Definitions:

Consumer Surplus

The variance between the sum consumers are inclined and can afford to pay for a good or service and the sum they genuinely pay.

Producer Surplus

Producer surplus is the difference between what producers are willing to sell a good for and the actual price they receive.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the trading of goods or services.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to a stable market condition.