In Using the Internal Rate of Return Method, the Internal

question 40

Multiple Choice

In using the internal rate of return method, the internal rate of return factor was 4.0 and the equal annual cash inflows were $16,000.The initial investment in the project must have been

• A)$8,000.
• B)$16,000.
• C)$64,000.
• D)$32,000.

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Definitions:

Net Working Capital

Net working capital is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities, indicating its short-term financial health.

Fixed Assets

Long-term tangible assets used in the operation of a business and not expected to be converted to cash in the short term.

Depreciation

The process of allocating the cost of a tangible or physical asset over its useful life, representing wear and tear, deterioration, or obsolescence.

Operating Cash Flow

Operating cash flow refers to the cash generated from the normal operating activities of a business within a specific time period.