Francisco D'Anconia Is Considering an Investment Opportunity That Costs $10,000

question 17

Multiple Choice

Francisco d'Anconia is considering an investment opportunity that costs $10,000 today and will pay $11,500 in two years.The IRR of this opportunity is closest to:

• A)7.24%.
• B)7.50%.
• C)10.00%.
• D)15.00%.

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Definitions:

Barriers To Entry

Factors that make it difficult for new competitors to enter a market.

Net Social Cost

The total monetary cost of the negative externalities produced by an activity or production, minus any benefits.

Rent-Seeking Behavior

Activities aimed at increasing one's share of existing wealth without creating new wealth, often through manipulation or exploitation of the economic environment.

Profits

The financial gain realized when the revenue from selling goods or services exceeds the costs of production.