You Are Considering an Investment for Which You Require a Rate

question 115

Multiple Choice

You are considering an investment for which you require a rate of return of 8.5 percent.The investment costs $ 53,500 and will produce cash inflows of $20,000 for three years.Should you accept this project based on its internal rate of return? Why or why not?

• A)Yes; because the IRR is 5.96 percent
• B)Yes; because the IRR is 9.56 percent
• C)Yes; because the IRR is 8.50 percent
• D)No; because the IRR is 9.56percent
• E)No'; because the IRR is 5.96 percent

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Definitions:

Strategy

A plan of action or policy designed to achieve a major or overall goal, typically involving resource allocation.

Long-Term Objective

A strategic goal that an organization aims to achieve over an extended period, typically beyond one year, to guide its direction and decisions.

Mission

The fundamental purpose of an organization, summarizing its values, goals, and the path it pursues to serve its stakeholders.

Management Accounting

Involves collecting, analyzing, and presenting financial and non-financial information to help managers make informed decisions to achieve business objectives.