Datta Computer Systems Is Considering a Project That Has the Following

question 73

Multiple Choice

Datta Computer Systems is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative) , in which case it will be rejected.

• A) 9.70%
• B) 10.78%
• C) 11.98%
• D) 13.31%
• E) 14.64%

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation, giving holders voting rights and a share in the company's profits through dividends and the appreciation of stock value.

Rate of Return

A financial return or shortfall on an investment, indicated as a percentage of its initial value.

Short 300 Shares

A trading strategy where an investor borrows 300 shares from a broker and sells them on the open market, planning to buy them back later at a lower price.

Initial Margin

The minimum amount of equity required to open a new position in a margin account, set by the broker.