Driscoll Company Is Considering Investing in a New Project

question 40

Multiple Choice

Driscoll Company is considering investing in a new project. The project will need an initial investment of $2,400,000 and will generate $1,200,000 (after-tax) cash flows for three years. Calculate the IRR for the project.

• A)14.5 percent
• B)18.6 percent
• C)20.2 percent
• D)23.4 percent

---

Definitions:

Fiscal Year

A 12-month period that businesses and governments use for accounting purposes, which may or may not align with the calendar year.

Private Sector

The part of the economy that is run by individuals and companies for profit and is not under direct governmental control.

Excess Burden

The economic inefficiency that arises when market behavior is altered due to a tax or subsidy, leading to a loss in economic welfare beyond the tax collected or subsidy paid.