A Project Requires an Initial Investment of $200,000 and Expects

question 22

Multiple Choice

A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years . The corporate tax rate is 21 percent. The assets will depreciate using the MACRS year 3 schedule: (t = 1: 33%) ; (t = 2: 45%) ; (t = 3: 15%) ; (t = 4: 7%) . The company's tax situation is such that it can use all applicable tax shields. The opportunity cost of capital is 11 percent. Assume that the asset can sell for book value at the end of the project. Calculate the approximate IRR for the project.

• A)12.00 percent
• B)11.00 percent
• C)20.02 percent
• D)14.06 percent

---

Definitions:

Functional Explanation

An explanation that accounts for the presence of a trait or behavior by its function and how it contributes to the survival or efficiency of a system or organism.

Social Hierarchy

The organization of individuals within a society into different levels of status or authority, often based on factors like wealth, occupation, or education.

Stratification System

The hierarchical organization of society into different social classes, castes, or other groups, based on factors like wealth, occupation, and social status.

High-Level Positions

Refers to roles or jobs within an organization that carry significant responsibility, authority, and usually higher pay.