Given the Following Information and Assuming Straight-Line Depreciation to Zero

question 68

Multiple Choice

Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year; salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.

• A) 6.25%
• B) 7.51%
• C) 8.15%
• D) 9.43%
• E) 10.24%

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Definitions:

Quality Circles

A group of workers who voluntarily meet together to discuss and propose solutions to workplace problems, aiming to improve the quality of products or workflow.

Workplace Organization

Refers to the methodical planning and structure of work tasks, roles, and processes within a company to improve efficiency and employee satisfaction.

Goods Produced

Items or products that have been created through a process of manufacturing, farming, or other means of production.

Secondary Labor Market

Contains a disproportionately large number of women and members of racial minorities, particularly African and Hispanic Americans. Employees in the secondary labor market tend to be unskilled and lack higher education. They work in small firms with low levels of capital investment. Employment is insecure, earnings are low, and fringe benefits are meager.