Use the Following Information to Answer the Question(s)below

question 28

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metals is considering opening a strip-mining operation to provide some of the raw materials needed in producing Rearden metal.The initial purchase of the land and the associated costs of opening up mining operations will cost $100 million today.The mine is expected to generate $16 million worth of ore per year for the next 12 years.At the end of the 12th year Rearden will need to spend $20 million to restore the land to its original pristine nature appearance.
-One of the IRRs for Rearden's mining operation is closest to:

• A)0%.
• B)10.6%.
• C)12.4%.
• D)72.0%.

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Definitions:

Implicit Marginal Tax Rate

The effective rate at which an additional dollar of income is taxed, taking into account both explicit taxes and the phase-out of benefits or allowances.

Government Transfers

Payments by the government to individuals or entities without the expectation of direct repayment or work in return, often taking the form of welfare, subsidies, or grants.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Economic Analysis

A systematic approach to examining the allocation of resources, focusing on the production, distribution, and consumption of goods and services.